Church & Dwight Q3 Earnings Call Highlights

Key Points

• Church & Dwight beat its third-quarter outlook: Net sales rose 1%, organic sales increased 5.1% and adjusted EPS climbed 13.6% to $0.92, supported by volume growth, innovation and a 170-basis-point gross-margin expansion.
• Growth was broad-based across the portfolio: U.S. consumer organic sales rose 4.4%, international sales increased 7.8% and specialty products grew 5%. Global e-commerce revenue surged 20%, while brands including ARM & HAMMER, THERABREATH and Waterpik gained momentum.
• The company raised its 2026 sales outlook and authorized buybacks: Church & Dwight now expects approximately 5% organic sales growth and about 7% adjusted EPS growth, while its board approved a new $1 billion share-repurchase program.

Church & Dwight NYSE: CHD reported third-quarter results that exceeded its prior outlook, led by volume growth, innovation and broad-based gains across its domestic, international and specialty products businesses. The company also raised its full-year organic sales outlook while tightening its adjusted earnings-per-share forecast.

Net sales increased 1% in the quarter, compared with the company’s outlook for a 1% decline. Organic sales rose 5.1%, above the approximately 3% growth forecast, as volume increased 4.6% and price and product mix added 0.5%.

Adjusted earnings per share rose 13.6% year over year to $0.92, exceeding Church & Dwight’s $0.89 outlook. Gross margin increased 170 basis points to 46.8%.

Broad-Based Growth Across Segments

President and Chief Executive Officer Rick Dierker said the company’s power brands delivered a third consecutive quarter of industry-leading organic sales growth, supported by innovation, distribution gains and marketing investment. The company has 26 innovations across its power brands, he said.

In the U.S. consumer business, organic sales grew 4.4%, including 3.6% volume growth and 0.8% favorable price and mix. Growth was led by ARM & HAMMER liquid laundry detergent, THERABREATH mouthwash and toothpaste, ARM & HAMMER cat litter and Waterpik water flossers.

ARM & HAMMER laundry detergent consumption increased more than 4% during a quarter in which the broader laundry category grew about 2%, according to Dierker. He said the brand gained share as consumers continued to respond to the value segment of the category. ARM & HAMMER cat litter consumption rose 5.4%, while the brand’s share increased 0.6 points to 24%.

THERABREATH gained 3.5 share points in total mouthwash to reach a record 26.8% share, strengthening its position as the No. 2 brand in the category, Dierker said. He noted that THERABREATH household penetration remained 14%, compared with 65% for the mouthwash category. THERABREATH Complete became the top-selling new rinse nationally, while the company also introduced portable rinse sachets.

Waterpik posted double-digit sales growth and gained share during the quarter. Hero’s acne cleansers launched with consumer ratings of 4.85 stars, according to management, while Hero consumption outpaced the acne patch category. Dierker said facial cleansers represent a $650 million category and about 30% of the total acne category.

International and E-Commerce Momentum

International organic sales increased 7.8%, driven by 9.1% volume growth, partly offset by a 1.3% decline in price and mix. THERABREATH, Batiste, Touchland and OxiClean contributed to the growth, and nine international brands posted double-digit gains.

Global e-commerce revenue increased 20% in the quarter and represented 25.9% of total consumer sales. Dierker said the company’s portfolio has benefited from both gains in online sales and acquisitions with relatively high e-commerce exposure, including Touchland and Miss Mouth’s.

The specialty products division posted 5% organic sales growth, with 2.9% volume growth and 2.1% favorable price and mix. The segment’s performance marked its 11th consecutive quarter of organic growth.

Touchland sales growth in the U.S. slowed from the company’s original expectations because competing products grew in channels where Touchland did not previously compete, Dierker said. He said the business is expected to be roughly flat for the full year, but the company has secured broader U.S. distribution and expects growth in 2027. Touchland recently launched in the U.K. and Australia, where management said early results were strong.

Margins, Costs and Capital Allocation

Chief Financial Officer Lee McChesney said productivity contributed 150 basis points to third-quarter gross margin, while acquisition mix and portfolio actions added 160 basis points. Volume, price, mix and foreign exchange provided another 40 basis points. Those gains were partly offset by 180 basis points of inflation and transportation-cost headwinds.

Marketing investment reached 11.9% of sales. Adjusted selling, general and administrative expense totaled $261 million, or 16.3% of net sales, reflecting acquisition-related amortization and investments in international operations, e-commerce and artificial intelligence capabilities.

Cash from operations was $841 million through the first nine months of 2026, producing cash-flow conversion of 114%. The company had $2.2 billion in debt and $447 million in cash at the end of the third quarter.

Church & Dwight’s board authorized a new share repurchase program of up to $1 billion, replacing the prior authorization. McChesney said the program has no expiration date and provides flexibility to return capital while continuing to invest in the business and pursue acquisitions.

Updated 2026 Outlook

The company now expects approximately 5% organic sales growth for 2026, at the high end of its prior 4% to 5% range. It expects adjusted gross-margin expansion of about 100 basis points and adjusted EPS growth of approximately 7%, narrowing its prior outlook of 6% to 8% growth.

Management said the outlook includes about $150 million of inflation, $50 million more than its original outlook and $20 million more than its July forecast. The assumptions include crude oil at roughly $100 per barrel. The company expects cash from operations of about $1.175 billion for the year.

For the fourth quarter, Church & Dwight expects approximately 4% organic sales growth and adjusted EPS growth of 17% to 19% from the prior-year period. Dierker said the company expects category growth of roughly 2.5% and remains focused on productivity, revenue growth management, innovation and margin expansion heading into 2027.

About Church & Dwight (NYSE:CHD)

Church & Dwight Co, Inc is a consumer packaged goods company that develops, manufactures and markets household, personal care and specialty products. Its portfolio is anchored by the ARM & HAMMER brand, which is used across products such as baking soda, laundry detergent, cat litter, household cleaners, oral care products and personal care items.

The company also markets a broad range of branded products, including OxiClean laundry and cleaning products, Trojan sexual wellness products, Waterpik oral health devices, First Response pregnancy and fertility tests, Nair hair-removal products, Orajel oral pain relief, TheraBreath oral care products, and vitamins and supplements sold under the Vitafusion and L'il Critters brands.

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