Church & Dwight (CHD) Q2 FY26 earnings call: guidance and Q&A

What were the primary drivers of the significant upside in organic sales growth this quarter?

Organic sales growth was broad-based across home care and personal care, both domestically and internationally. International organic sales grew 9.1%, with strong performance across Europe, Asia, and Latin America.

“The good news is it was pretty broad-based. But as we said in the release, I think air breadth, cat litter, I'd say ARM & HAMMER laundry was kind of flattish. Anything else you would add, Lee? So I think as Rick said, it's pretty broad-based. Home care, personal care across the globe, really good to see international at 9% as well, and that was pretty broad-based across both Europe and Asia and Latin America as well.”

asked by Rupesh Parikh · answered by Richard Dierker

How is ARM & HAMMER Laundry performing given increased competitive promotions, and what are the expansion plans for THERABREATH toothpaste?

ARM & HAMMER Laundry held its share despite significant competitive promotional increases, demonstrating its strong value position. THERABREATH mouthwash continues strong growth, with 20%+ consumption and 4.5 share points gained, enabling the successful launch of THERABREATH toothpaste, which already holds a 1 share point due to premium shelf space and strong value proposition.

“On THERABREATH, I would say, again, number 2 mouthwash, lots of runway. Consumption grew at 20% plus. We grew 4.5 share points to 25%. We're less than 1,000 basis points from the market leader who's Listerine. Our household penetration is still relatively low at 14 compared to the category at 65. That is enabling us to go into other parts of oral care like toothpaste, like we never deserved the space that we got for THERABREATH toothpaste, but because of the success of the mouthwash, we got some premium great shelf space. And as a result, we have a great brand with a great value proposition on fresh breadth and cleaning. -- and it's doing extremely well, and it's already at 1 share point.”

asked by Anna Lizzul · answered by Richard Dierker

Is the THERABREATH toothpaste rollout exceeding expectations, and what was the nature of the higher inflation seen in Q2?

THERABREATH toothpaste is meeting or slightly beating expectations and contributed to Q2 sales. Q2 saw slightly higher transportation costs than anticipated, contributing to inflation, but productivity programs are expected to mitigate the full-year impact, with gross margin expansion anticipated in the second half.

“THERABREATH pace is off to a good start is what I would say. And it's meeting or slightly beating our expectations. I think there's a lot of great conversations in the works with additional retailers to get behind it, which is fantastic. Those conversations are easier when you have a their both mouthwash brand and business that's just, again, growing so fantastically well. So yes, I mean for the quarter, THERABREATH Pace was a contributor to net sales for sure. I did it over deliver a little bit, maybe some. [...] Just to answer the question. We had a just slightly higher transportation costs in the second quarter, even a little bit higher than we thought. But as we talked about for the year, we're still at $30 million -- that has an impact.”

asked by Christopher Carey · answered by Richard Dierker

Why was the high end of the full-year EPS guidance range maintained despite improved sales and gross margin, and what is the strategy behind increased reinvestments?

The company's strategy is to reinvest over-performance (e.g., in marketing, AI, growth initiatives) to sustain a virtuous cycle of share gains and innovation support, rather than solely maximizing short-term EPS. This approach ensures long-term growth and competitive advantage.

“I would say, look back at our track record over the last 1, 3, 5, 10 years, what do we do when we feel like we're over delivering and performing well against our expectations and against the industry as we tend to spend back. Like we could, in theory, beat the earnings and EPS in any 1 year, but we choose to spend more on marketing or we spend more on investments. And so -- we want to make sure that flywheel is going that virtuous cycle happens, and we keep gaining share in shelf space and support the innovations that we're launching.”

asked by Bonnie Herzog · answered by Richard Dierker

Can you elaborate on the evolving international M&A strategy and the factors driving increased optimism?

The international M&A approach shifted from a central M&A team to empowering local management teams to identify and pursue deals, supported by the M&A team. This change, implemented 6-8 months ago, has significantly increased deal flow and engagement, moving from theoretical to practical M&A opportunities.

“I think we are best in our pick on it for a little while, and it was all about people and structure. It wasn't a bad approach, but we -- initially, we added M&A people and a person in Europe, for example. And I would say it was a little bit disconnected from the management teams. And it was almost like a center of excellence on M&A. We changed that approach about 6 to 8 months ago. And we said the management teams are responsible and the M&A person supports that. And so the -- all of a sudden, the international management teams, the Country Director and his or her staff, Australia had the same thing and Southeast Asia, the same thing. In Latin America, the same thing. You have a right to go and an obligation to go look at not just what you hear from the bankers or for our M&A contact. But where do you want what brands would you like to go and look at. And that has -- when we made it, I guess, their objective and they owned it. I'd say that was the unlock for us.”

asked by Stephen Powers · answered by Richard Dierker

How is BATISTE performing in the U.S. given its challenges, and how does the new ERP system contribute to the company's optimism?

BATISTE in the U.S. is growing but losing some share (2% consumption growth vs. 5.5% category), though international BATISTE is performing phenomenally. Management is confident in a U.S. turnaround with new innovation and pricing strategies. The North American ERP system is a key competitive advantage, enabling flawless and seamless acquisitions, exemplified by Missmouth's rapid integration by the end of August.

“BATISTE in the U.S. is growing. We're growing a little short of the category. Category grew 5.5%. We grew closer to 2% from consumption. So we lost a little bit of share, 1.44%. That was closer to 4 or 5 share points in prior quarters. We are making great headway on BATISTE. I've seen the inflection. I'm not worried about the taste. We have a great set of actions that are already in market or lined up for market in late this year, early next year -- on sizes and offerings and price pack architecture. So we have some great innovation queued up and just a lot of confidence in the BATTISE brand. [...] The ERP system, I think it's an underappreciated fact that we have a North American ERP system. And so as we do acquisitions, it is 1 of the things that enables us to do acquisitions so flawlessly and seamlessly -- and just to give you a real life example. We closed on mismouth, I think, around June 1 or so, and we're going to be fully integrated by end of August. Like that is lightning fast, even for us.”

asked by Edward Lewis · answered by Richard Dierker

Given cost inflation and brand strength, why isn't the industry, including Church & Dwight, more inclined to take additional pricing, and what is the retailer openness to this?

In the current environment, consumers are pressed, leading to higher elasticities. Church & Dwight prioritizes offsetting inflation through productivity and promotional optimization. While pricing would be considered if high inflation persists, the current competitive landscape, possibly influenced by tariff rebates, sees increased promotional activity. The company believes its value/quality position allows it to win without aggressive pricing.

“My answer doesn't really changed a lot from what I talked about last quarter. I think in this environment, consumers are pressed. And we see that. Like when you see stuff go on promotion, I would say elasticities are higher than they normally would be. So consumers are pressed. And so our job is to help offset that as best we can. And we said last quarter, we're going to do that with productivity. And we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that, and this inflationary environment stays higher for longer, then we would look at pricing eventually. And that's still true.”

asked by Kevin Grundy · answered by Richard Dierker