Financial Data and Key Metrics Changes - Organic sales grew by 0.1%, exceeding the outlook of -2% to flat [4][22] - Adjusted EPS was $0.94, which was $0.09 higher than the $0.85 outlook [5][22] - Adjusted gross margin decreased by 40 basis points to 45% [4][22] - Reported revenue was down 0.3% [22] Business Line Data and Key Metrics Changes - U.S. Consumer business organic sales declined by 1%, with volume growth offset by negative price mix [11] - ARM and HAMMER liquid laundry detergent consumption grew by 3.2%, outpacing the category growth of 1.3% [12] - ARM and HAMMER Litter consumption grew by 3.4%, while the category was up 4.1% [13] - TheraBreath consumption grew by 22.5%, despite the mouthwash category being down [14] - HERO outpaced the acne category with consumption growth of 11.4% compared to 1.5% category growth [15] - International business delivered sales growth of 5.3%, with organic growth of 4.8% [17] Market Data and Key Metrics Changes - Online sales as a percentage of global sales reached 23% [7] - Category consumption for the largest categories finished around 2.5% in Q2 [5] - Consumer confidence levels have started to recover after hitting a twelve-year low [6] Company Strategy and Development Direction - The company is focused on a balanced portfolio of value and premium products, with a strong emphasis on innovation [6][7] - Strategic actions include exiting the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses [8] - The company is undertaking a strategic review of its vitamin business, exploring options for divestiture or joint ventures [10][36] Management's Comments on Operating Environment and Future Outlook - The macro environment remains volatile and uncertain, but the company is confident in achieving its full-year organic outlook of 0% to 2% [6][19] - Management noted that category consumption is looking better than three months ago, with brands gaining both dollar and volume share [19][20] - The company expects continued innovation to drive growth in the back half of the year [19][68] Other Important Information - The company closed the acquisition of Touchland, which is experiencing strong growth [7][49] - Cash from operating activities for the first six months was $416.5 million, a decrease of $83 million from last year [25] - The company executed a $300 million share repurchase [25] Q&A Session Summary Question: Can you provide context on the strategic review of the vitamin business? - Management outlined three options: divestiture, joint venture, or restructuring the business for profitability [34][36] Question: What is driving the good consumption trends in the laundry business? - The company is seeing market share performance due to effective pricing and sizing strategies [39][40] Question: Can you quantify the impact of retailer destocking? - The destocking was around a 100 basis point drag in Q2, down from 300 basis points in Q1 [44][45] Question: What are the priorities for the Touchland business post-acquisition? - Touchland is focused on driving category growth and expanding household penetration [49][50] Question: How does the company view the promotional environment? - The promotional landscape is mixed, with litter promotions spiking while laundry promotions remain consistent [82][85] Question: What is the outlook for gross margins? - Gross margins are expected to contract by 60 basis points due to tariffs and inflation, but productivity efforts are ongoing [27][89]

Financial Data and Key Metrics Changes - Organic sales grew by 0.1%, exceeding the outlook of -2% to flat [4][23] - Adjusted EPS was $0.94, which was $0.09 higher than the $0.85 outlook [5][23] - Adjusted gross margin decreased by 40 basis points to 45% [4][23] - Reported revenue was down 0.3% [23] Business Line Data and Key Metrics Changes - U.S. Consumer business organic sales declined by 1%, with volume growth offset by negative price mix [11] - ARM and HAMMER liquid laundry detergent consumption grew by 3.2%, while the category grew by 1.3% [12] - TheraBreath consumption grew by 22.5%, maintaining a 21% share in the mouthwash category [14] - International business delivered sales growth of 5.3%, with organic sales increasing by 4.8% [17] Market Data and Key Metrics Changes - Category consumption for the largest categories finished around 2.5% in Q2 [6] - Online sales as a percentage of global sales reached 23% [7] - The gummy vitamin category grew almost 4%, marking the third consecutive quarter of growth [10] Company Strategy and Development Direction - The company is focused on a balanced portfolio of value and premium products, emphasizing innovation [6][8] - Strategic actions include exiting the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses [8] - The company is undertaking a strategic review of its vitamin business, exploring divestiture options and potential partnerships [10][122] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has started to recover after hitting a twelve-year low [6] - The macro environment remains volatile, with uncertainty around the U.S. Consumer and global economy [18] - The full-year organic growth outlook remains at 0% to 2%, reflecting a balanced view of the macro environment [27] Other Important Information - The company closed the acquisition of Touchland, which is the fastest-growing brand in the hand sanitizer category in the U.S. [7] - Cash from operating activities for the first six months was $416.5 million, a decrease of $83 million compared to last year [26] - The company executed a $300 million share repurchase through an accelerated share repurchase program [26] Q&A Session Summary Question: Can you provide context on the strategic review of the vitamin business? - Management outlined three options: divestiture, joint venture, or shrinking the business for profitability [38][122] Question: What is driving the good consumption trends in the laundry business? - The company highlighted effective pricing strategies and consumer trading up to larger sizes [44] Question: Can you quantify the impact of retailer destocking? - Management estimated a 100 basis point drag in Q2, down from 300 basis points in Q1 [49] Question: What are the priorities for the Touchland business post-acquisition? - Focus on driving category growth, increasing household penetration, and launching new products [52][54] Question: How does the company view the promotional environment? - The promotional landscape is mixed, with litter category promotions spiking above historical averages while laundry promotions remain consistent [88] Question: What is the outlook for gross margins? - Gross margin is expected to contract by 60 basis points due to elevated input costs and tariffs [28][92]

Core Insights - Church & Dwight (CHD) reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.85 per share, and showing a slight increase from $0.93 per share a year ago, resulting in an earnings surprise of +10.59% [1][2] - The company achieved revenues of $1.51 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.76%, consistent with year-ago revenues [2] - Church & Dwight has outperformed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Earnings Outlook - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $1.54 billion, and for the current fiscal year, it is $3.48 on revenues of $6.11 billion [7] Industry Context - The Consumer Products - Staples industry, to which Church & Dwight belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

Financial Performance - Q2 2025 net sales decreased by 0.3% to $1,506.3 million, with domestic sales down 1.4% and international sales up 5.3%[2] - Organic sales increased by 0.1%, with domestic down 1.0% and international up 4.8%, exceeding the quarterly organic outlook[2] - Reported EPS was $0.78, while adjusted EPS was $0.94, reflecting a 1% increase and exceeding the company's outlook of $0.85[3] - Total net sales for the three months ended June 30, 2025, were $1,506.3 million, a decrease of 0.3% compared to $1,511.2 million for the same period in 2024[32] - Net income for the three months ended June 30, 2025, was $191.0 million, compared to $243.5 million in 2024, representing a decrease of 21.5%[32] - The company reported a diluted net income per share of $0.78 for the three months ended June 30, 2025, down from $0.99 in the same period of 2024[32] - For the six months ended June 30, 2025, reported sales growth was -1.4%, with organic sales growth at -0.6% overall[47] - Net income for the three months ended June 30, 2025, was $191.0 million, reflecting a decrease of 21.2% year-over-year[46] - Adjusted net income per share for the same period was $0.78, which is a 21.2% decline compared to the previous year[46] Operational Metrics - Cash from operations for the first six months of 2025 was $416.5 million, a decrease of $83.4 million year-over-year[15] - Gross profit for the six months ended June 30, 2025, was $1,306.6 million, down from $1,399.1 million in 2024, reflecting a decline of approximately 6.6%[32] - The gross margin for the three months ended June 30, 2025, was 43.0%, down from 47.1% in the same period last year[46] - Operating income was reported at $641.9 million, resulting in an operating margin of 21.3%, an increase of 1.0% from the previous year[49] - The operating margin for the three months ended June 30, 2025, was 17.5%, a decrease of 4.8% year-over-year[46] Marketing and Expenses - Marketing expense as a percentage of net sales increased to 10.4%, reflecting a 30 basis point increase from the previous year[13] - The company’s marketing expenses for the three months ended June 30, 2025, were $157.1 million, an increase from $152.4 million in 2024[32] - Marketing expenses amounted to $304.4 million, representing 10.1% of net sales, an increase of 1.3% year-over-year[49] - SG&A expenses for the same period were $228.2 million, accounting for 15.1% of net sales[46] - SG&A expenses were $452.8 million, accounting for 15.0% of net sales, with a year-over-year increase of 0.4%[49] Strategic Initiatives - The company completed the acquisition of Touchland, which is the second-largest brand in the hand sanitizer category in the U.S.[6] - The company expects 2025 reported sales growth of approximately 0 to 2%, including the impact of the Touchland acquisition[18] - The company plans to exit the FLAWLESS™, SPINBRUSH™, and WATERPIK™ businesses by early 2026, incurring approximately $51 million in pre-tax charges[8] - The company plans to focus on integrating the Touchland acquisition and realizing cost savings, although there are risks associated with successful integration[32] Future Projections - For Q3, the company expects reported and organic sales growth of approximately 1-2% and adjusted EPS of $0.72, a decrease of 9% compared to last year's adjusted Q3 EPS[22] - The company forecasts reported sales growth of 1.5% for the quarter ended September 30, 2025, and 1.0% for the year ended December 31, 2025[50] - Organic sales growth is projected to be 1.5% for the quarter and 1.0% for the year, indicating stable performance[50] Asset and Debt Management - Total current assets as of June 30, 2025, were $2,229.8 million, slightly down from $2,240.6 million at the end of 2024[33] - The company’s total assets decreased to $8,788.2 million as of June 30, 2025, from $8,883.1 million at the end of 2024[33] - The company’s long-term debt remained stable at $2,205.8 million as of June 30, 2025, compared to $2,204.6 million at the end of 2024[33] Divestiture Impact - The company reported a significant divestiture contribution of 0.6% to sales growth for the three months ended June 30, 2025[45] - Equity in earnings of affiliates decreased by $2.2 million, totaling $4.2 million for the period[49] - Other income (expense), net, showed an improvement of $12.2 million, resulting in a total of $(41.5) million[49]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence through daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores provide ratings for stocks based on value, growth, and momentum characteristics, aiding investors in selecting securities likely to outperform the market in the short term [2][3] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Style Score focuses on identifying undervalued stocks by analyzing financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [4] Growth Score - The Growth Style Score evaluates stocks based on projected and historical earnings, sales, and cash flow to identify those with sustainable growth potential [5] Momentum Score - The Momentum Style Score assesses stocks based on price trends and earnings estimate changes, helping investors capitalize on upward or downward price movements [6] VGM Score - The VGM Score combines the Value, Growth, and Momentum Scores to identify stocks with the best overall characteristics for investment [7] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors in building successful portfolios, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.75% since 1988 [8][9] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down choices [8] Stock to Watch: Church & Dwight (CHD) - Church & Dwight Co., Inc. is a leading producer of sodium bicarbonate and offers a range of household and personal care products [11] - Currently rated 3 (Hold) with a VGM Score of B, CHD has a Growth Style Score of A, indicating a forecasted year-over-year earnings growth of 1.2% for the current fiscal year [12] - Recent earnings estimates for fiscal 2025 have been revised upward, with the Zacks Consensus Estimate at $3.48 per share and an average earnings surprise of +7.3% [12]

Core Viewpoint - Church & Dwight (CHD) is anticipated to report a year-over-year decline in earnings due to lower revenues for the quarter ended June 2025, with a consensus outlook indicating potential impacts on its near-term stock price [1][3]. Earnings Expectations - The upcoming earnings report is expected to show quarterly earnings of $0.85 per share, reflecting a year-over-year decrease of 8.6%, and revenues are projected to be $1.48 billion, down 2.2% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.31% lower in the last 30 days, indicating a reassessment by analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Church & Dwight is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.44%, suggesting a likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Church & Dwight exceeded the expected earnings of $0.89 per share by delivering $0.91, resulting in a surprise of +2.25%. Over the last four quarters, the company has beaten consensus EPS estimates three times [13][14]. Investment Considerations - While Church & Dwight is viewed as a compelling earnings-beat candidate, investors are advised to consider other factors that may influence stock performance beyond earnings results [17].

Industry Overview - The Zacks Consumer Products – Staples industry is facing challenges due to elevated living costs affecting household budgets, leading to cautious consumer spending and pressure on sales [1] - Companies in this industry are also dealing with increased raw material costs and higher selling, general, and administrative (SG&A) expenses [1] Demand and Strategies - Despite the challenges, demand for essential consumer products remains strong, with industry leaders like Procter & Gamble, Colgate-Palmolive, Church & Dwight, and Grocery Outlet employing strategies focused on innovation, cost efficiency, and digital transformation to sustain growth [2] Trends Impacting the Industry - The industry is experiencing rising costs in raw materials, labor, and transportation, which are negatively impacting profit margins [4] - Increased SG&A expenses and investments in digital transformation and marketing are further straining profitability [4] - Consumer spending volatility is evident, particularly among lower-income households, due to rising living expenses and declining personal savings, which dampens purchasing power [5] Revenue Optimization - Companies are refining operations to optimize revenue generation, focusing on enhancing e-commerce and digital initiatives, and innovating to meet evolving consumer demands [6] - Strategic acquisitions and divestitures are being pursued to concentrate on high-growth areas [6] Industry Performance and Valuation - The Zacks Consumer Products – Staples industry ranks 144, placing it in the bottom 41% of over 246 Zacks industries, indicating dull near-term prospects [7][8] - The industry has underperformed compared to the S&P 500 Index and the broader Consumer Staples sector over the past six months, gaining only 1.5% compared to the S&P 500's 5.3% and the sector's 10.5% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 20.13X, lower than the S&P 500's 22.63X and the sector's 17.32X [14] Company Highlights - **Colgate-Palmolive**: Focused on effective pricing strategies and productivity initiatives, with a Zacks Rank 2. The consensus estimate for its current fiscal-year EPS has increased by 1.7% to $3.66 [17][18] - **Grocery Outlet**: Employing a balanced growth strategy with a focus on e-commerce and private-label offerings, holding a Zacks Rank 2. The EPS estimate remains at 74 cents, indicating a decline of 3.9% from the previous year [21][22] - **Procter & Gamble**: With a Zacks Rank 3, the company emphasizes sustainability and adaptability, maintaining an EPS estimate of $6.78, suggesting a growth of 2.9% from the year-ago period [25][26] - **Church & Dwight**: Also holding a Zacks Rank 3, the company is focused on innovation and digital expansion, with an EPS estimate of $3.48, reflecting a growth of 1.2% from the previous year [29][30]

Group 1: Investment Strategy - Investing in growth stocks is a proven method to enhance investment portfolios over the long term, with a suggested initial investment of $5,000 in strong, growing companies [1][2] Group 2: Steris - Steris focuses on manufacturing and selling products for patient care, particularly in infection prevention, with 71% of its revenue coming from the healthcare segment [4] - The company has experienced consistent growth in revenue and net income, with free cash flow increasing alongside net income, allowing for rising dividends, which increased from $0.52 to $0.57 per share, a 9.6% year-over-year increase [5] - Projected revenue for 2023, 2024, and 2025 is $4.54 billion, $5.14 billion, and $5.46 billion respectively, with operating income and net income also showing significant growth [6] - Steris aims for annual revenue growth in the mid-to-high single digits, driven by rising demand for medical procedures and potential mergers and acquisitions [8][9] Group 3: Mastercard - Mastercard operates a payment network facilitating secure transactions, with a strong brand presence and 3.5 billion debit and credit cards globally [10] - Revenue for 2022, 2023, and 2024 is projected at $22.2 billion, $25.1 billion, and $28.2 billion respectively, with net income increasing from $9.9 billion in 2022 to $12.8 billion in 2024 [11] - Free cash flow surged by 56.3% year over year to $2 billion, demonstrating the company's ability to generate excess cash for dividends, which increased by 15% year over year [12] - Mastercard continues to innovate, launching new payment technologies and forming partnerships to enhance its competitive edge [13][14] Group 4: Church & Dwight - Church & Dwight is a consumer products company managing key brands, with revenue growth driven by organic growth and acquisitions [15] - Revenue for 2022, 2023, and 2024 is projected at $5.38 billion, $5.87 billion, and $6.12 billion respectively, despite a slight dip in revenue and net income in the first quarter of 2025 [16] - The company has a history of consistent dividend payments, with a recent increase from $0.28375 to $0.295 per share [17] - Management believes there is significant growth potential, particularly from power brands and international expansion, with recent acquisitions supporting this growth strategy [18][19][20]

Core Insights - The consumer-packaged goods industry features prominent players like Procter & Gamble (PG) and Church & Dwight (CHD), each with unique strategies and brand portfolios [1][2][3] Procter & Gamble (PG) - PG is a leading global company with a diverse product range, maintaining strong market share and customer loyalty despite economic challenges [4][5] - The company employs an integrated growth strategy focusing on product superiority, operational efficiency, and innovation, supported by effective digital marketing [5][7] - PG's supply chain is designed for efficiency and resilience, allowing quick responses to market demands and geopolitical disruptions [6][7] - Financially, PG shows strong free cash flow and consistent capital returns to shareholders, with projected sales growth of 2.6% and earnings growth of 3.6% in fiscal 2026 [13][23] - PG's stock trades at a forward P/E ratio of 22.85, which is lower than CHD's 26.55, indicating a more attractive valuation [18][21] Church & Dwight (CHD) - CHD has demonstrated resilience, gaining volume share in 80% of its business despite macroeconomic pressures, with nine of its 14 major brands outperforming category growth [9][10] - The company focuses on disciplined portfolio management and innovation, recently divesting non-core businesses to concentrate on growth drivers [10][12] - CHD's marketing strategy is aggressive, with a significant portion of net sales allocated to marketing, and it is enhancing its digital presence as online sales grow [11][12] - Financially, CHD's EPS is projected to grow by 1.2% in 2025, while sales are expected to decline by 0.4% [16] - CHD's stock has underperformed compared to PG, with an 8.1% decline over the past year [17][22] Comparative Analysis - PG is positioned as a stronger investment due to its scale, diversified portfolio, and operational excellence, while CHD, despite its agility and niche performance, operates on a smaller scale and faces valuation challenges [22][23]

Business Segments and Financial Performance - In 2024, Church & Dwight's total company net sales reached $61 billion[12] - Domestic segment accounted for 77% of the business, while International contributed 18%, and the Specialty Products Division (SPD) made up 5%[11] - The company's power brands represent more than 70% of sales and profits[15] - In 2024, 46% of the company's portfolio was in Personal Care, 49% in Household products, and 5% in SPD[17] - The company's product portfolio consists of 64% premium products and 36% value products[19] Brand Performance and Market Growth - US category growth shows Q1-25 Avg at 15%+ and Q2 - QTD Avg at 25%+[32] - In 2024, 5 out of 7 power brands gained market share[34, 35] - In Q1 2025, the Liquid Laundry Detergent category saw a 34% consumption change vs YAG, while Arm & Hammer experienced a -02% change[42, 43] - In Q1 2025, the Clumping Litter category saw a 19% consumption change vs YAG, while Arm & Hammer experienced a 23% change[53, 54] - In Q1 2025, the Total Acne category saw a -12% consumption change vs YAG, while Hero experienced a 130% increase[64, 65] - In Q1 2025, the Mouthwash category saw a -05% consumption change vs YAG, while TheraBreath experienced a 261% increase[74, 75] Acquisition and International Expansion - Touchland acquisition is expected to close in Q2 2025 and will become the company's 8th power brand, with TTM net sales of approximately $130 million[89] - International net sales in 2024 were approximately $11 billion[125] - The company targets +8% international organic sales growth[121] Financial Targets and Outlook - The company's evergreen model targets include +4% organic sales growth, +25 to +50 bps gross margin improvement, flat % but higher $ marketing spend, -25 to 0 bps SG&A, +50 bps operating margin, and +8% EPS growth[157] - The company's FY 2025 financial outlook includes 0% to +2% organic sales growth, ~11% marketing spend, and 0% to +2% adjusted EPS growth[178] - Tariffs are estimated to be $190 million, with 80% expected to be mitigated[182]