- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Church & Dwight Third Quarter 2022 Earnings Conference Call.

Before we begin, I have been asked to remind you that on today's 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 risks 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. Matt Farrell, Chief Executive Officer of Church & Dwight. sir. ahead, go Please

Matthew Farrell

I'll operator. done, got everyone. I'm lots a questions. And results. begin you, Rick over us our open Dierker, going for the today. with CFO. Then QX of We've to Rick review the Good Thank call Thanks to is morning, when joining to turn we'll Okay. talk for about. call

was in the revised reported early say, and of time. off, we our hit of full expectation X%, revenue that to I'll X%. exceeded that to which and September, revenue X% outlook midpoint we're our X.X%, at X% tracking First year our minus was range up QX, In

in As of while brands the majority the release, you are read our performing well.

coloring are And this Adjusted FLAWLESS. in are our EPS accounted business, for and headwind $X.XX. We results WATERPIK, those vitamin a have those businesses account for QX. was And -- businesses year. our sales X X% that

baking also growth was lower liquid outlook, ARM FLAWLESS, customer share Now litter, total brand by the delivered and achieved percentage U.S. QX, and consumption double-digit this lapping THERABREATH of OXICLEAN is our to XX sales HAMMER higher on we all-time lower be the vitamins in year vitamins of offsetting share detergent and Similarly, spend. fighters impact & purchased QX, mouthwash VITAFUSION a soda impacted HAMMER these of to continue in strong down value an XX%, the continued discretionary BATISTE XX performance WATERPIK & for stain XX.X%. ARM also the and high condoms a consumption TROJAN high The clumping supplements was dry of sales prior In vitamin categories. COVID HAMMER portfolio all-time & laundry fewer of as SG&A returned approximately quarter. XX% international ARM In competes, full of as businesses businesses The shampoo consumption variant for sales growth. market brands, The and account and shares. grew which was spending. to of achieved EPS marketing by in driven trade timing XX%. The online detergent $X.XX the market sales. our decline above the as higher than in our by year which to Delta were discretionary most gummy category, were expect our global and reported we households and and sales online sales, impacted

to going business. on I'm comment each Now

U.S. X.X% consumer, the U.S. sales had is which organic decline. up First

share, market at Looking X power of share. brands held gained XX our or

Looking QX ahead, U.S., as in of improvement few the I I value which start a our at year promotional we QX highest want and and categories in expect quarterly rates look began marketing in to the positions down spend. market to laundry. to with want our fill share and continued of expect highest we detergent further important QX. the in our The in even trade

liquid the X.X%. QX, category During laundry grew

declined X%. premium & also down. break trade from value ARM benefited X%, the laundry we detergent unit down, if HAMMER Now grew that dose

the Our market fighters, dose to growth while category ARM consumption OXICLEAN XX% was consumption ARM box, up shampoo. shampoo share XX%, ARM gained driven grew recession. up by was we QX, BATISTE & The HAMMER category black our by X.X% last the X.X%. our quarter. QX. in a gained condom similar was category & category consumption while XX% was consumption so yellow XX%, & X.X%. in XX% up box, litter which in up litter, in QX, is we the premium, With double-digit quarter share more & in In XX%, as up dry while to dry consumers brand pods TROJAN enjoy compared X%. to HAMMER the grew of ARM which and is growth the HAMMER grew HAMMER, consumption, value, grew category the unit stain which benefit migrating in the XX%, and to had long-term The was share Both In now

we more of again, gained So success RAW new points the share, XX thanks our and basis to market marketing. BARESKIN condom of TROJAN targeted

performing to THERABREATH for THERABREATH XXXX, expected most ZICAM December quarter total had mouthwash. are results #X category. the & delivered in grower we be also is recent acquisitions in THERABREATH, the mouthwash in growth. nonalcohol of of mouthwash with long-term points Dwight strong the future. XX% clear this Church alcohol-free to X.X #X THERABREATH a brand XX.X% grew a quarter. which Our is great acquired share well. and of the consumption

recall, XX% December the ZICAM may in ZICAM of we in shortening You with a share the is acquired segment brand XXXX. in cold #X QX.

be Now in to than far more latest in XX% reminder, looking severe is ZICAM to our the a in mid-October. as And recent We flu of consumption ahead happens U.S. Hero, QX, acquisition, years. QX. projected approximately on the regular closed season

There's longer did excitement about Hero this well, right. great ahead look business in X.X and total deal XX% market the points while XX% gaining term. as a here own QX, consumption that and share the XXXX in we achieve All share to we growing Now extremely of acne treatments to brand a performed category.

International. Next is up

growth delivered the business quarter. growth by subsidiaries, of strong posted international international X.X% in QX, organic in driven which the Our primarily

weakening our Group lockdowns, Global Markets continue other demand to we the and China On by has in QX. expect this to due impacted been hand, in

Finally, Specialty Products.

keep organic in is organic growth of the top XX.X% delivered business X% on growth in that in XXXX. QX mind Our X% the Specialty growth But quarter. Products organic

discretionary purchase to that, brands, a vitamin of couple want the FLAWLESS, have X after WATERPIK about minutes Now our discussing spend talk I'll I business. And longer and which cycles.

First, WATERPIK.

#X So water brand the WATERPIK flossers. is in

lower water in flossers for to U.S. continue see We dollar the consumption

consumer lower-priced a good cordless trade models. retailers. trade If super was positive decline and inventory to the their However, Sonic-Fusion. reset retailers year-to-date down down XX% In in our reductions are actually growth product like full our XXXX approximately WATERPIK at and to as as of driven back our products unit inventories volumes in we healthier and QX came portion is from XXXX look and XXXX, both flosser the mix. Shipments expected by by and year premium for are decline XXXX, sales consumers

to activities XXXX, We hygienists in such as penetration continue in of year, dentists to pre-pandemic return drive invest flossers. we Lunch for to and for & demand-driving household Learns levels Lunch WATERPIK, & And with Learns. next expect to

is away extremely XX the recommendation Kleenex driven WATERPIK is fair say its to XX% the XX% consumer of product and out population recommend X purchases professional. only flosses are as that a remember, a the dentists Now still dental of brand not by water and of from of by This is U.S. health going important flossers It's gum every name. day.

through single-digit growth the looking from we business WATERPIK line high when Now back, top XXXX acquired XXXX. averaged

So XXXX, step back we're taking prospects a but big WATERPIK that are confident we're sound. in growth the for long-term

at discretionary have in health the inventories category which lower other #X higher hair this resulted is we the removal. FLAWLESS, women's brand is which in Now brand experiencing retail. consumption We're in

which the in After and business the been product by narrowing the the delay further Our been caused period, ended over our in lockdowns supplier. has the winners. the new XXXX, team XX-month products earn-out share our marketing China assortment conclusion at the end hurt of of to took a launching by has front

brand, familiar with focus that's digital So And from of if in Brow, Mani also you're older space. we're to Face, younger shifting Pedi. consumers beauty the and consumers the targeting the

prospects the have these changes positive will we long-term on a Now for impact business. believe the

being Now as finally, category. #X were impacted in is adult interested temporary the consumption have consumers who over in during we times prevention exited vitamin. the VMS, Category COVID have gummy

lost recession. due clear being our rates, Beyond that and particularly category earlier fill the category the year. COVID, purchasing and lower dynamics, fewer supplements some the in has the VITAFUSION brand is It's are impacted households by post to vitamins share also

So stats. here some are

last growth the the rate in in recently X minus For X% plus plus X% in has QX. XX% been quarters, and most QX, QX, category

term, in minus like promotion ramped our have up long-term you The leave takeaways our to strong. XX% is majority trade especially and confidence half, news We vitamins with. the to here. October, category weeks in decline XX% a our numbers that with gummy X%. appeal the XXXX. is marketing that some conclude and of now of we the compares has have to in fill the X from to investment few QX outlook. and the In QX, are a And the confidence coloring And first is good the plus category in X% Now there us QX I'll increase rate I'd second the brands prospects. long-term gummy longer Case business the of capsules improving. few transition in And and moderated We've gives in category. minus believe pills of our good, over

QX. Now it I'm on Rick over to turn details going to more give to you

Richard Dierker

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

volume the top by will for minus was company. X.X%, sales Matt right Third to partially primarily higher drag EPS marketing of a down better Reported was positive I sales, was go was margin reviewed $X.XX of than segments, The from declined to quarter $X.XX down gross X.X% currency. Revenue line up X.X%, $X.XX, outlook was and due to timing the outlook of X%. year. our SG&A prior including offset lower as our pricing Organic X.X%. so the spend. than expense X% higher revenue X% for

gross decrease Our third XXX point ago. XX.X%, margin was from a quarter basis a year

and by basis QX impact, related points inflation, Let and impacted basis distribution positive margin offset was points acquisitions basis bridge. XXX XXX XX costs, a labor. pricing; from from through higher XXX positive points positive walk me by productivity. a you costs basis from These were to point Gross primarily largely commodity manufacturing the of

our down first was have X% increase QX percentage further we Marketing $XX improvement QX. of this XXXX Moving in to from million in were Fill marketing. was half XX.X% XX%, a the year-over-year, significant rates of sales, sequentially expect of fill net our in a sales as Marketing million as rates and although quarter. levels improved. expense $XX was of

in to net continued expect marketing increase in spend XX% We of QX approximately sales.

cash. Other adjusted basis now a year-over-year. the income points QX levels $X.X average debt to million interest $XX.X rates. For SG&A, our And to XX outstanding resulting year quarter was increase rate XX.X% and effective SG&A a tax, million, all-in compared for higher was expense XX.X% And from ago. decreased for higher

decreased and X due first months cash vitamin. XXXX, inventory levels million to from from WATERPIK, of primarily to activities operating higher million the $XXX.X For $XXX FLAWLESS

as We down on hand And cash XX million. levels the September XX, next $XXX come over inventory expect months. to of was

XX% of X.X%, ahead sales rate decline organic to is tax X% largely a approximately an be exercises X% growth a Adjusted contraction. X% This prior versus to significantly sales X%, stock EPS. decline higher $X.XX adjusted year's tax expected margin to per due year from is QX, QX decrease EPS of of number share, due of gross expect which to approximately the Looking and $X.XX high ago. we a year of reported in to unusually primarily was low quarterly option rate to last

for approximately X%, Turning be range. to full the sales the the to previously midpoint full we to X% year reported X% year, expect our growth outlook of

of sales most The be We of expect within a growth decline the the full to portfolio. brands, the to in adjusted our The extent by XXXX. mix businesses talked $X.XX, is expect Matt slowdown $X.XX across to consumption to X% X%. strong We offset influenced as range EPS of organic to be year compared X% margin now approximately in has about. discretionary XXXX

to laundry to we $XXX capacity cash to closing, expect for litter. anticipation approximately manufacturing continue expand XX%. full expect full as plan a year million. the and is year approximately future continue volatile the And we our continue $XXX tax be rate CapEx in of growth And in We to in operations year perform we In full from to now be million environment. now

invest questions. gains and I in we in chain our to brands would We expect our be supply with Matt to continue market share that, take fill further as levels improve. any and And happy QX

Operator

Instructions]. [Operator

Mohsenian question Stanley. comes of of Dara from the Our first line Morgan

Dara Mohsenian

for changed in just year-over-year bit detailed a QX, what I earnings be guidance explicit you but think this I September pressure know Can in early the known. update? question. year more rate post the a just First, tax that on there's was

changed. what's on just on side. vitamin curious second, just the then So And

versus that sense. articulated last business tough variance You comps guys from is have that year, the makes suffering COVID

category, So users people year. from you of As to the look any who in about just to were on-the-fence during as as of to they're sort pullback COVID, as that weakness you of some lingers out in and sort aren't brought term, consumer in next the won't the more spending during COVID? maybe and be the vitamins thoughts loyal more to brought were think category these on perhaps susceptible that this who longer there business loyal is risk

Richard Dierker

Yes. question. and it's mix, vitamin Rick. margin the the Dara, will I'll Matt take take

outlook get vitamins there has little It the outlook. bit change We're the the have we change So still of revenue The number. X% is really, the the mix and in to come midpoint, is like the the straightforward. rest has and -- though. businesses pretty household and different portfolio WATERPIK been a down up. The FLAWLESS gone didn't

And so that's for and mix also lower-priced a also units Matt a to higher-priced issue mix WATERPIK talked earnings. profit a on the the there's down units, how impacted going pressure. created from caused about that's trade that's a basis

Matthew Farrell

rates. you as opening in my lost heard vitamins, to share fill remarks, we've respect With some to due Yes.

brands some we consumers So lost year. earlier in the had to

win to got we there's And households back. definitely fewer purchasing. them So

category, , all -- of Obviously, that it's given COVID, consumers who the just category actually season several to call been we do is, we now, many a flu the for leaving question can coming VMS flu quarters the weaker know say knowable. because is I the had bolster things the beyond But do have since left? the we a bottom? And season years. Your starting are that think haven't out. end will we not bottom should few are we quarters COVID

quarter. X% quarter As quarter, in in in reduced the X% since early I we at where that fourth the it decline previous mentioned, least year-over-year saw is was fourth to the the that,

could start So we then an it's be that flatten inflection the may out to category grow. hitting point and where possible

Operator

Our comes Carey Fargo. of line next Chris the question from of Wells

Christopher Carey

domestic segment. of your to consumer FLAWLESS, determine versus trying I'm how WATERPIK, much pressure Vitamin international your impacted

gave exposure some geographic And connected us on sense growth would look in your what domestic mix businesses. neutral out looks consumer update given you a frequencies non-U.S. organic of on X% which your businesses. things how today previously do regions. those these and headwind, helpful. the assuming wondering today that U.S. were sales your businesses, You've versus international then the I or you have of these have between quite I'm can to if Obviously, that, been reporting for perspective that you just is how wonder growth.

Matthew Farrell

the international the U.S., is -- just comment U.S. I'll affects WATERPIK global of U.S. more U.S. that, lion's business. is you share even Yes. as it and know, the more both FLAWLESS a business, towards And being so skewed even

WATERPIK X% So U.S. fair think FLAWLESS. I for have the more if probably those -- towards somewhat U.S. numbers you. and for split versus don't But I it's far as to for is international say equally as skewed that

Richard Dierker

more we'll little the XX-XX had headwind. are I but that a the X% a you get said X% headwind And I usually add XX-XX. think were granularity only about But bit any don't split, divisions give in and into said, is would sales, more were it. quarter. net And tried but on granularity, our WATERPIK that, probably if for But flat more we Yes. Matt we as to a quarter to businesses X we visibility those we

Matthew Farrell

environment on call put morning Yes. Chris, an them of got out but the is clicking. basis, really we called And ring have the certainly hurt in release a weakening reason on we fence us X economy. a around our have that that's where And to the businesses, where want this like weakening problems we a in consumer, long-term business because XX% We we are. you the

Christopher Carey

queue. back If then helpful. just get up follow could I quickly in the really That's and

look and at confirm headwinds, Just start reasonable personal headwinds your could those lapping for as you come growth is getting you're came comps. seeing this And just and as pertains about business it then any what is sequential when when and the just can stabilization started to such, care to businesses, off? potentially the or together it you to expect beyond these whether worsening you tough just really

Matthew Farrell

but we about QX and of and next to what have say going people meaning quarters, next the about WATERPIK choppy, be that, looking comps, even we a to that questions do But are that think et after can . business cetera. expect couple FLAWLESS at XX% is year, I'm QX out. of lot year-over-year sure XXXX, of Yes. we just things of

Richard Dierker

we the said a Yes. that as remarks, side, that, on see the Vitamin that's color his starting minus the And in we'd to X% that good we're about Matt so the just Delta prepared pattern, inflect minus And think you. variant year-over-year. then give to X% in start we're to seeing because of

Operator

Credit Our next Kaumil comes question line of from of Gajrawala the Suisse.

Kaumil Gajrawala

are the much some bit how this, a there's problem you and there's about how side there's CapEx you and it it Because demand? versus to -- a of a CapEx and like you fill into vitamin advertise much how incremental little balancing talk on Can but advertising put versus this sounds but of going problem, demand rate maybe uncertainty to between to alluded it.

So are managing you these pieces? how

Richard Dierker

I'll Matt end then the can consumer. on up CapEx maybe start with and

about So too. demand and I'll a little bit, talk --

said XXXX, about a So put on we We a the to CapEx, that was recall. $XXX CapEx, for for and going to of CapEx. laundries, litter example, pause had and vitamin have million step-up, we're on vitamins

will be we so finalize and full And give $XXX XXXX that our new $XXX number when million. probably for million We'll between that XXXX outlook.

the on CapEx that's side. So

Matthew Farrell

Yes. And you had marketing. a question about

we the over quarters, we QX, as last marketing had And kind fill lower of round sales. X% back percentage of numbers, Because a look you If had rates. and few just QX why?

-- around year year rate. XX%. it's we're in build say XX.X%. in year not can year, see spending QX. to XX% you on that. where next full prudent a I'd on And up But a be at we're to basis, -- so then probably do And we next that this calling you And So expect higher QX was that amped

a move number. will that to So higher

fill become will As the marketing normal, return also normal to rates more a spend rate.

Richard Dierker

add, on And his about category, right? X% XX% would in when yes, think that's I what I And XXXX. had talking Matt Vitamins, comments. the understand it's the XXXX, key to it in up we're And was was in down but just really category

on a So up stacked it's XX%. basis,

So it's not line cratering, levels. to high a it's think super in like is with pre-COVID growth back category relative just coming the I the

Matthew Farrell

Yes.

QX, In QX. if the rate look be at fact, to for similar stack you it'd

Kaumil Gajrawala

heard on I'm the obviously better Okay. laundry, then to trading it some your And down? indeed supply of some others? strength competitors. versus at to any than your Or Great. that the it moment have We've the some just wondering, is of you linked perhaps competition? shortages was ability is supply at of

Matthew Farrell

No, I here. don't a think supply very factor would be big

the think this we've and before is economy the entirely ago this seen great many the years I recession. consumer. driven by And during many,

were in seeing we're And about the liquid but was in category pods. we it X% we Boosters, one the talk is or flat, it We're Scent Scent So up seeing laundry Boosters X%. where didn't detergent.

everywhere your It's all laundry. we're in where It's So aspect I'm sure of laundry, real weak within seeing supply Boosters and comment many pods, and concluded. have will so so does we liquid every not about it the subcategories continue. value, to laundry, extend Scent it

Operator

Our the Bank. comes next from Powers of Deutsche Stephen question of line

Stephen Powers

kind portfolio. FLAWLESS well -- total had degradation there's as constraints supply quarter, and you, then the in the retailer guess across I for and WATERPIK of Vitamins listened both like as the as third sure and destocking impacting business demand to continued in I you

consumption, yourself are forward, think in to when shipping core businesses drag? the in to consumables you do that we whether the been going biggest As business when you or see able the have about --

Richard Dierker

our answer QX more that bit XX%. Yes. rates in a But Well, complicated. were fill is little

historical QX Remember, to in expect numbers full to going were XX%. closer We be XX%, XX%. they're

that that. us that's international materials within still cases, of There's that raw addressed some well. capacity we're categories. in holding So are key of distance few areas largely In back couple key a a as it's -- spitting being for

most to So be year, I shipping think as in we exit consumption. this categories, we'll

Matthew Farrell

Yes.

X it's -- in to have we think to X on I to going more here that's brands. the more why next, far think say, the business. -- those for respect rest with As And focus that's is months, X But choppier we be Steve, for don't worries inventory channel, it's of WATERPIK as ship FLAWLESS. and the about consumption the to the

Stephen Powers

Okay.

for 'XX guess talked you if this cost on next brush also an about of side next into broad -- ambitious? Okay. whether I give just And is on Or And then you strokes, Could too any not thinking much? update at year. marketing is so, layered And the Evergreen in this walking coverage that table things or point? call do you want you've on away how that us into from year? a

Matthew Farrell

have range QX. a We for

commentary You're a XXXX. asking us for on

there you think So are and XXXX. pluses minuses the when about

said and won't some is early well. like majority XX to all for for of respect WATERPIK is doing from where our the things have going a we're now. know next to year. But procurement next So that. FLAWLESS. super back, business Certainly, RFPs there's things strong winning. the inflation turn those we and really is and with right come days quarters but I choppy out. days RFPs, We're Laundry input few Value seeing

we for continue obviously, to months. expect So XX next the that

-- there couple our anything other to may of drag. to way, there? a we dealing interest Rick, XXXX, rates going in other be And pluses the and everybody spend if else so marketing in so -- a want is FX, throw you we're that's obviously, minuses. reinflate higher with or then Going all

Richard Dierker

normalized Yes. we're that comp. a -- have I is because higher margin though expect. as of to have We're say, would we going said, incentive going kind Matt so normalizes rates, marketing to just tailwind what fill gross higher

hope of detail. lot the starting into again, not puts are get yet. commodities call in of going would inflect. to We're of the having and X to on we not I are But say XXXX some that do some a to We'll and just So that more months. RFPs ready takes. we're glimmers

Matthew Farrell

to Yes, it's Steve. call early way too it, just

Stephen Powers

a for any been And has still there are Rick, to in Okay. buying commodities then, it next and year? position? you forward relates floating coverage as Or

Richard Dierker

question. good That's a

run-up to now. context, we XX% some But are example. would back diesel to last X% levels did down. hedged will believe were hedged. the we today, by I hedging we to as historical tell right, still said usually because call, on We for I So continue an about about approximately not you we're XX% those XX%. just come do costs usually, before mostly, we're

Matthew Farrell

Yes.

the material So all way or one all those factors, other. Steve, they're

how the of each XXXX. is to we we are January call question end them once big So of get the when

Operator

Our from next Modi RBC. comes of question Nik

Sunil Modi

Just of questions. a couple brand category-level

is looking in Just it just of was And of at then around scan least on laundry, would And household better penetration data. this like XTRA the kind at down. typically data, looks what I'm some there? that, do I is numerator curious happening environment on your thoughts think the than seeing in you what do

you hoping was just And had a question then comment just I on on I FLAWLESS. that. So could

Matthew Farrell

far households, for -- discussion as loads. that's people something here households, that's -- Yes. that's a Well, topic losing as as people as far doing not been less wash

So further that. can't any go on I

we that of fill ARM during & XTRA as as great in are XTRA phenomenon past over XTRA expecting the back value that's now. we issues. been detergent. to XX just the did winner prioritizing the for deep could the a because As in -- XX yes, be But our us clearly XXXX, recession. HAMMER see rate we've same months goes, far And behind That's

said you ahead Nik, on of I you FLAWLESS. too, one another And think had us. that's So

Sunil Modi

I'm of in to consumer. this tends covering does a the there as be of that company And when I'm time recovery a euthanizing older about kind of of base, the terms try this just younger into just you that or brand you curious alienating the kind years that, to seen consumer worried could brand that, of FLAWLESS, XX make the to guys curious lot any brand? older space, have of younger. Yes, the right, from the have disruption that. if that prolong consumer looked

Matthew Farrell

to don't consumer. size would it's going that noticeable great be younger so that older we consumers so that, the and so the shift going is the of prize say I think to No. the that with dramatic alienate that is

So would no, a I not that's say worry.

Sunil Modi

their and some recovering. then question, categories sorry. talked Great. that just seen you retail. one any earlier curious been operate inventory happening Colgate And around some the just their in brick-and-mortar -- Okay. about obviously you've rates at more guys just have destocking today if I'm curious of categories of in. I'm Matt, fill

Richard Dierker

Nik, gave September. we guidance was destocking it. We in was at quarter, retail the it multiple Early a reason category, categories. part it's inventory of And actually Rick. the of because we said talked I'll take wasn't bit one of about and that. it in just

was And minus so our that implicitly X already outlook. in

saw see it we that, early through But really after any didn't we so And the got in we quarter. further. that

Sunil Modi

Okay.

That's was over. basically it's I So get what to trying at. Excellent.

Operator

question next Our comes Grundy of line Jefferies. from Kevin of the

Kevin Grundy

to what's more margins on you your we trade environment promotional a and are as for both quite big of in there normalizing, for loss. that's perhaps of start promotional some in seeing commodity discussion that support? earlier pricing of still down the bit differences Question look term. subside. the then of some near sort should position? of environment of start out then, to some better of sort gross the is P&L, And year all commentary that trade your And the driving the laundry. trade key your There seems up. in I of support What's be of your anticipating under lot And a seeing to in kind But between just expectations Procter guess, to of next and with the competitors with about a context one to asking We're fill around share pressure, as and I'm within supply of inflation and expectation up. course, some a opinion, wind considerably catch rates

Matthew Farrell

that. household and on comment can't detergent areas. Yes. take most the I look competitors, promotional at, are you the the laundry and of so side cat on so But litter, appreciate if can I those house,

was So XX% the in for But have than year-over-year. was down category And XX% higher actually liquid sold-on that QX. at were laundry XX%. And that. we we are deal that obviously, competitors

historically. been also the promotional still category the So deal then lower has sold-on litter QX. The still as XX% is it as in worthwhile And And in talking that's I that low litter about was well. environment, think spend, it's probably well. than historically

at the still the XX% than high are in and teens were typically in we Now level. XX% historical the QX, XX% lower which but are levels,

right I say could super of environment it's but So all us has promotional the QX. that wouldn't been in QX in change QX, ahead and that and now,

Kevin Grundy

and on Quick just fact it volatility on is the -- give transact. to something potentially some the that well, is helpful, focus transact pass Maybe it. some performing takes you you a any the management So of and balance the your be not, does it the that then it's of to in else, a consummate large sheet albeit portfolio you're with can even comment from on deal? And shape, of balance Any thoughts integrating M&A. the I given is Got follow-up, if just the place Hero, there thoughts would good that volatility, some but I'll in pause of a and on. it in and know general, and majority just guys then the good sheet pipeline.

Matthew Farrell

care already ORAJEL. employees example. for whole acquire remember, right? from to THERABREATH, we handles didn't business, an We THERABREATH. important back we it's have oral lot oral Well, toothbrushes, It's businesses, to Yes. care And So go take of a when toothpaste. business

So we're with buyers. same already dealing the in the category

the to about we're with the few mind, next for when So the X founders you we that in on all retain think keep us that hanging Hero, really sticking to a and want years, for employees. are tuck-in. And was Hero, then

we team So intact, that an business. to run got high-performing

as strong. at another looking where pretty have said, balance the we new even don't pipeline far And like at since we as always you position feel we're in closed. the Hero are we sheet look is as goes, at deals deal So business. And and a the can't one looked

So it's not going categories. we're to good for looking say transact, and to strong brands but we're always

Richard Dierker

to when perspective easy integrating. And at with the a of Matt organization how We're that complexity integrate an to measure as from we're Kevin, said, a has and much Hero, going integrated one it's fully time, and can a was perspective And the already. of systems tuck-in. always handle from year. deal, the systems middle do how THERABREATH we're by much

a pretty process. quick that's So

Operator

line & next Our Parikh of of Rupesh comes the Oppenheimer from Co. question

Rupesh Parikh

So on any see with guys markdowns were or inventory levels? risk front, obsolescence Do of higher up XX%. inventory inventories the you

Richard Dierker

X Rupesh, levels have get over expect I'd for taken some Yes. takes I China to inventory in source and next is through fair what devices QX it's back both consumption have production remarks, as like One, it's and long-dated in to XX inventory products of in reserves, we things. my months bit. FLAWLESS. as that those But long-lead Yes, an QX, we whenever line months It we some that. inventories question. the Rick. We've say WATERPIK a a said adjusted of right? slowed out we just run example, like prepared

recognized that. we we've already of some like So feel

Rupesh Parikh

you balance puts I QX. some then, And Rick, the of headwind shift on and Okay. if you in out maybe look just the for gross as Great. know called the margin, you takes of mix year? through the But the that's out walk new guys can a

Richard Dierker

Yes. that probably through I previously, we bridge was year for it quarter remarks. high long. -- keep inflect bit of positively the to kind finally I our in my level. would We've I that mean the gross just I had prepared margin. been QX, a And we said went expected would it saying in all say little

so we contraction. that would to say it's we're going now just I slightly. think contract seeing And

I think going improved be much sequentially. it's to

near in much not that down, to I think QX. not we XXX in QX. were be opinion, in We're down going our

from in that on lower little itself it's and baseline. couple And takes. is perspective. puts So year tailwinds because a of of mean, commodities, a the I But partly bit there QX are comps because partly prior that's

Operator

Goldman from comes Jason of English of line the Sachs. question next Our

Jason English

equates like high water be back way, of WATERPIK U.S. sales XX%. in then guess that $XX want if U.S., things. a there I U.S. over to may sounds So business. of we to assume Organic given like come -- XX% earlier your drag the they're personal it, It businesses challenged actually drag. around And side X unpack like look if to the of to it's down either which million back But the impact question assume [Technical the I that it about looks on care just about trying of we hit XX% Difficulty]. XX% that around the

it and personal you're TROJAN. growth sales recovering robust stripping out, your organic with care about it with So you're the be even growth despite talking BATISTE about declining despite looks like would in still the talking

little you is business, else care on performance unpack bit personal a understand, us underneath that help weighing can So right more us for and hood now? that the what of

Matthew Farrell

of release done we're a we're going math. you, in and prepared U.S. okay, to took I division. the here swing to back the for haven't we what we business, the out tell international mean -- the but envelope, of We're put recast not for you by Yes.

Richard Dierker

XX% of it's just cities, quarter, Yes. to fill the mid-XXs Remember, probably personal tale household, order for that. care. right? I XX% would in It's is like X for for our it's add the a

but you in through growing on and that So care that as or there, still And we're Vitamins. hear care right, shortages all in doing BATISTE go FLAWLESS, X the beer to it's to we solve. X It's you're can personal up going detail, there's fantastic, we're I'll example, meet key are businesses. demand. decline of out We all the Consumption have is can't personal WATERPIK issues And right? dramatically. industry those bulk not the X -- an You right? like example. that give the an is trying

to trying quickly demand. And to possible that that as But unbelievable so aluminum cans. we're meet add as

of lower because the just ingredient not our level because key one fill would than SKU. VMS, be down, would is example down is Another we category one on but specific like

expect QX. of us is rates there we fill some exit as behind care largely we to that personal be because So pressure

Jason English

Okay.

and this more comp, is And normalized tracking how year. Okay. any marketing. give -- is a into year Can level? next around more versus that a headwind also, we is investment you you incentive imagine mentioned more year a I mean? And reload into normal to normal a you normalization What some next you or the as market go return does of incentive go us comp context it as

Richard Dierker

is give Yes. anywhere going year. an next tracking to the example. best be you. between probably I would payout, say We're a headwind ballpark as a It's XX% incentive comp I'd

next to our a And get X.X as expectations. year up so will headwind be that back would we payout be

-- on was question me, Jason. remind first Your

Jason English

what Marketing, normal marketing. more mentioned return Matt My you to that does that expect to was question mean? would . marketing.

Richard Dierker

we'll And go I We'll clear through what yes. very think on that February. what Yes, it be in it means. is and

what it's should perspective. time in to you marketing a stairstep been that from think our historical over expect sweet spot has we think a I back

Operator

the JPMorgan. Teixeira next Andrea of line from question of Our comes

Andrea Teixeira

on that of But this I if represents WATERPIK consumption, issues not there So fast-moving quarter except, quarter, sales. of -- in of I'm the if -- me and being that and comparison you retailers, it are the top been VMS. inventory? wondering some -- obviously of there has could guidance be understand segment, year. it's So from year-to-date? very my or was discussed, seems if is understand you're about much issues your is on I fourth item, question and with can there served. I if the Again, correct know just in with that if about XX% about wrong, that, VMS FLAWLESS the down And that business that is worried and high excess a but issue you a comping that as how SKU is I be well, last that's the and embedded in course, destocking

Richard Dierker

Andrea. Yes. Thanks,

that greatest One quoted issues we a -- was about the growth. vitamin XXXX QX XX% little is is the And with core think there's issue. category, portfolio. I earlier overarching X and the

better And we forward, coming of a So inflect a right? XX so It's as but happening move you so. And we biggest little extreme that what's thought. we bit we're that's or weeks one. expect the been more to that off off But last in these high. than that's coming intend kind little bit

is kind went share. of little vitamins fill will And we levels, Matt for and one exit improve, our well. our that expect will that help the bit that we a second year, as through as levels The fill so

is you portfolio, So of the more is at probably biggest business another vitamin the those time are I in -- and of how bit a that FLAWLESS you hey, that, this give X little much things. try big WATERPIK, number. discretionary this than more we detail that granularity to terms XX% XX% the give wouldn't and

I category parts key take think is the really than comment it, predominantly it's more fill of issue. X of though level and home a the

Andrea Teixeira

a then mid-single. XX% the like the growing of that's fair. No, remaining And probably business is

Richard Dierker

Yes.

which business fantastic. If the math, of of is you rest X.X%, XX% the do X%, the is growing

Operator

from Lizzul of of question next comes America. line Our Bank the Anna of

Anna Lizzul

not were little return depth of to they topic the as promotions follow really some essentially a wanted same pre that hearing up bit just COVID. to to peers of We've been I promotions. are from your going on the

COVID? with frequency So where wondering you're versus depth you promotions if of comfortable are just here your and pre now

Matthew Farrell

Yes. I right we're now, are winning. mean, where we

category So some the in at laundry of the XX%. we're And numbers is share. XX%, I liquid quoted, gaining we're

a right, X will in that what can't I So months. but it for predict heat-up, the competitors need do you're would next no there's appear

Operator

Our James. next of the Olivia Tong line Raymond question of comes from

Olivia Cheang

and pricing promotion. on question My is

obviously You price your on pressures on portion the pricing X saw while some everyday the price/mix portfolio a point obviously, sequential higher in but consumables. of QX, in acceleration

little of give you impact versus care. then a household mix And bit bit price? on what perhaps color a can domestic little on versus So personal had

Richard Dierker

in WATERPIK versus of And but we then And domestic In household we the was QX, X.X% we because personal we help with in can QX. price/volume kind in me, I front From back price/mix. have went said that up X.X% the don't time. bumped of mix I QX, to largely Yes. of QX issue. to had you growth to mix care X.X%. the across

quarter a that and litter impact QX. that year pricing -- was full laundry in we of so full announced had really new that QX, in And

from that was overweighing So WATERPIK or other whatnot. any drag

kind yes, -- then sequence events of of So drivers some the of price the mix. that's so on of

Olivia Cheang

you consumption will COVID term. your I'm trends then recognize end planning back ends? term. near are where ultimately curious factor I in pre-COVID could was? do it And be get Does levels mean be you for? that was or Obviously does think where What view vitamin stay Vitamins. a your longer and view? getting it. pre-COVID on here it back you Got of variant up to consumption there. what Still think it where it does But on above to flu it

Matthew Farrell

on on need to pretty so transition think do from a expanding we're But the capacity, capacity. to planning The capsules Look, important our going is a put to gummies We've we pause got that were and right? factor. that. term, pills long we

if Yes, the of lot VMS at all. as of going a expect XX% continue total the COVID. And category people discovered people certainly, And gummies. today, a the of in to it's So that's future. but we some exited, you look not result percentage the is have category

we rough to kind of for least future the for next going of a here, at couple consequently, but think bright ride the we're a is quarters. have still So the business,

Operator

of Our Lieberman next the comes line Lauren of question from Barclays.

Lauren Lieberman

So just a few questions.

the up I the is 'XX. it business. Just dynamics fair? more -- quarter, mean to is half just not First least again, year. more half first -- progression. this of implied next in is we discretionary less, back Rick, probably at tailwind at and get mix inflecting still gross that discretionary of second kind likely know, the margin of But in overall that gross mentioned businesses, the you've you've that I called the XQ of for that talked feels when side kind what's like half on of year, getting a thing given I the out toward until you're you margin first of like progression some about the headwind, it's continued look or

Richard Dierker

you the that margin answer next half, And I'm half about we'll just XXXX say ahead kind into just all talking the were ready give you so I or yet. give would of of we're at XXXX to to details, now, want first to not visibility of as getting we strokes. February. all And Yes. quarterly that second our expands bridges the ourselves broad trying guidance get in tell and is year. guys brush gross all, right on would I

Lauren Lieberman

fill of where question understand to I already -- then of I the really year, it you've a as But just months. times to improving, wanted And been sense achievement. grappled back marketing. push back of in said been But again out-of-stocks over said, it's an a been Okay. last have fill also which this course that's rates XX-plus come makes the of haven't on with ability couple categories of string issue. is going rates, an kind on and you've terms to supply,

that So to don't improving you a still tailwind should business move really problem. haven't rates if didn't to the as rates to fix have why mean, not want come understand we did. fill is the to growth I you that it forward. sales true I and understand been I from out-of-stocks a just tailwind saying But improving just fill

Richard Dierker

Yes.

-- to would going we're XX% be it's have to rates, that down promotions to that of we as We've means means I'm being because to have I think, that long, at said go -- year able XXXX we going comments, through I'm has sure not Matt, areas, not think we the this certain much I different examples that that, fill can't. to, some for overall, exists. too. as to in turn year. consumption we're but going But match that all be happened And like able to

fill. So about of back mind when that's my in of kind we're talking the

Matthew Farrell

by are the and being to table. finally we're still money out-of-stocks retailer better the is we we an And of of out-of-stocks a at XX% it something say because we we fill. it's because less when our And issue, funds still The on proud with leave get Yes. But inability the lot cracked XXs. low not of. way,

that drag have gross another on we that's profit. our So

that So are drag certain a our sales, creating SKUs Lauren. us do, for that are in organic on categories, we problems definitely certain have

Lauren Lieberman

any should we color would like the the incentive in piece be final And sorry, but be just down -- anyway not the just SG&A great, that was But there's SG&A quarter. levels last year. spending, an on curious terribly than bunch, year just different would on SG&A quarter. a of I'm was too. presumably if It thing Okay. the next comp But But come about, reset ago. thinking a than

Richard Dierker

favorability. pressures it's of incentive on comp. we of dragging last When fortunately think I at the SG&A that And because whole have recessionary below you key to expected items, some alluded Yes, quarter, that's some these of kind company of discretionary metrics. it the is

around answered that Jason our and just I so was payout XX%. And tracking said

And a we that per the we'll that's quarter one and the so that year. to year, get want for not have and next benefit in the would refunded se

Matthew Farrell

X last you Sales, And annually, Lauren, X right? got cash. margin, have If gross on. X, recall, we targets EPS and we the a

our know, is and affecting you what's well that's flow. as EPS where our incentive So cash comp, our

Operator

the Truist. comes question of Bill next Our line Chappell of from

William Chappell

I questions. of just and guess, couple Lauren's clarifications, on Jason's A

X you Or variable a that So give fourth it quarter? bigger benefit assume quarters. you accrued the in third the comp way will in look a normally? that there quarter? Or I the reversal is not it first Was the at in for

Richard Dierker

some categories on of we basis, in more of and Yes, as QX you impacted discretionary get pressures some were these cash accrual the always on catch-up, then QX accrual, have example. year-to-date example, flow, year-to-date to these QX. in the tracking and catch-up we of then to you And kind adjust for the a have and accrue as like on an like favorably inventory,

So yes, that's true.

Matthew Farrell

it's year down Yes, been though. long all coming

William Chappell

Okay.

quarter like the So benefit from this or an there accrual. reversal outsized wasn't

Matthew Farrell

a a QX in was There in benefit benefit QX. and

Richard Dierker

as we -- in a comps as down. bigger projections, benefit QX for have instance, And come

William Chappell

you and pause put on mean it's you're really to But stabilize the of XXXX to lowering -- just Maybe maybe I and by said CapEx kind that's Got versus couple those too million, which same your the understand appreciate. said you X up expansion. it. $XXX understand second, I how I to the starting And trying -- think together. to vitamin at a commentary then and it the But it's on trying CapEx I was would you point, aggressive. just business. levels, way put

we're why tape expansion think CapEx back to X that years you would you down from normal, just would probably kind of getting If now? capacity add

Richard Dierker

decline. behavior demand planning is all off nuance a all was stuck, doing COVID all that and new this it this no behavior, XX% a No, XX when stuck of we baseline is question. this fair XXXX assuming of from were Yes. started and forecasting we there's whatever, increase it's incremental, when The months our capital project, ago, of jumping

we're And readjusting that decline so of behavior, now from baseline that going behavior, a we're from growing not that a from decline and our seeing all it but just there. back,

not capacity we project, can easily months, going mean need doesn't XX on we're -- and So it plan when to that it we XX do that's do doing. just that, the we it for to means we to what pause

Matthew Farrell

Yes.

outside The a to Bill, other COVID go third-party supplier. too, thing, times, get had is we and during

So today. we have ability our more flex in to supply

So a that flexibility timing gives us more the little of with CapEx.

Operator

Edge. Consumer from comes Feeney Jonathan question the next of Our line of

Jonathan Feeney

wanted I Obviously, about have marginal earlier on I coupon sheet, , guess as the, guess, have. rates but to follow funding valuations would just you congratulations balance managed I particularly a think, up tremendous M&A. the how I changed on X.X% amount, question

environment worse M&A Matt, or do accretive Like those funding think become or Rick X hurdle for about and right maybe how we margin that? better -- a quantify do it have how has And changed? differently So you with now? M&A valuations rates rates How on up? down

Matthew Farrell

more tenure expense. on focused observation. cash and an No, it's look it's the now expensive at rates a acquisition. the it's rates, cash right We interest and And going change by where at to interest look and great is earnings, commercial where is fund we're and to incremental earnings in impacted just

at as would as So yes, hurdle look from deals cash earnings standpoint. a that a at least we how far make higher it

Richard Dierker

is positive and around interest Yes. net-net like -- it against A bidding years earnings especially of want as equity, well. accretion X% and would a are for we own matter typically they to add X% going going or that's time, just people I that be doesn't generate a though, But think X%. those to could brand of it's that and for And rate. the if X%, private that. to XX business I lot X%, rate the actually is handle a to us, interest cash good most not

Operator

of Our next line question Grom the comes UBS. of Peter from

Bryan Adams

Adams on for Peter. is Bryan This

worse of incrementally know the wanted if it's say though the gotten I guide in a it's mark-to-market the how and seeing But But have as it's just of on you're on the the much that of to some you in back were anything September. a get Europe. consumer September. and weakening business. terms things to fair contemplating probably I of I doesn't piece smaller since in know updated performing Sounds business part there assume

Matthew Farrell

insightful an Yes. That's question.

bills over some heating you've But sure consumer are U.K. the the just about to in We XX% effect cover of just to of I'm plant support year-over-year. months worried you the next are try up government European to illustration, give our about and X an the bills. our on focus utility read like that.

something it watch. concern. a So It's but is look, QX something built to it is we've our into

So it's Bryan. a good observation,

Operator

Thank the questions you. back time. I'd at turn I'm like for showing call over remarks. no further closing any this to Matt Farrell to

Matthew Farrell

talking Thanks, everybody and do we today, to look Okay. about us forward everybody, joining for to XXXX.

us. joining thanks So for

Operator

conference. you. you that gentlemen, Thank concludes Ladies all participating. Thank and today's

may disconnect. You Have day. a now great

Church & Dwight (CHD) 28 Oct 222022 Q3 Earnings call transcript