Church & Dwight Company, Inc. (NYSE:CHD) announced financial results that surpassed expectations for the fourth quarter, buoyed primarily by strong international revenue gains and improved margins. Despite ongoing cost pressures stemming from inflation and tariffs, the company's strategic actions in productivity and product mix contributed to a nearly 1% expansion in adjusted gross margins during the quarter.
The company reported adjusted earnings per share of 86 cents for the fourth quarter, exceeding the consensus estimate of 84 cents. Total quarterly sales reached $1.644 billion, modestly above the forecasted $1.639 billion. This performance underscores the company's capacity to generate revenue growth even amid inflationary headwinds. Net sales increased by 3.9% year-over-year, predominantly propelled by international segment gains, while organic sales movements were more subdued, rising 0.7%.
Breaking down revenue by segment, Consumer Domestic net sales totaled $1.271 billion, reflecting a $45.5 million or 3.7% year-over-year increase. The Consumer International segment turned in net sales of $299.8 million, a $14.7 million or 5.2% rise from the prior year's period, indicating robust overseas expansion. Specialty Products generated net sales of $73.2 million, marking a $2.0 million or 2.8% increase.
The improvement in the adjusted gross margin—up 90 basis points to 45.5%—was driven by several factors including productivity enhancement programs, increased sales volumes, and beneficial shifts in business and acquisition mix. However, these advances were partly offset by inflationary and tariff-related expenses, even after the company's mitigation efforts.
Operational cash flow remained strong, with cash generated from operations tallying $1.2 billion in 2025. This figure represents an increase of $59.2 million compared to the previous year, attributable to higher cash earnings and initiatives to optimize working capital management.
Reflecting confidence in the company’s financial health, the board approved a 4.2% increase in the quarterly dividend, raising it from $0.295 to $0.3075 per share. The annual dividend payout will rise from $287 million in 2025 to approximately $291 million, with the next dividend payment scheduled for March 2, 2026.
Looking ahead, Church & Dwight issued guidance that projects first-quarter adjusted earnings per share of 92 cents, which falls short of analysts’ consensus estimate of 96 cents. For the full fiscal year 2026, the company anticipates adjusted earnings per share to range from $3.71 to $3.81, aligning closely with Wall Street’s target of $3.73. However, the GAAP earnings forecast of $3.56 to $3.68 per share is slightly below the analysts’ estimate of $3.74.
CEO Rick Dierker highlighted planned new product launches expected to sustain organic growth, noting, "We expect new product launches in 2026 to continue to drive approximately half of our organic growth as we innovate in a number of key categories." This emphasis on innovation aims to underpin the company's growth trajectory amidst a competitive landscape.
The market responded positively to the earnings release, with Church & Dwight's shares rising by 3.89% to trade at $98.30 as of Friday’s publication.
Key Points:
- Q4 adjusted EPS of 86 cents exceeds consensus estimates by 2 cents.
- Net sales rise 3.9% year-over-year, led by international segment growth.
- Adjusted gross margin improves by 90 basis points to 45.5% amid inflation and tariffs.
- Quarterly dividend increased by 4.2% to $0.3075 per share; next payment on March 2, 2026.
Risks and Uncertainties:
- First-quarter adjusted earnings forecast of 92 cents per share falls short of analyst expectations, signaling potential near-term earnings pressures.
- Inflation and tariff costs continue to challenge margins, despite mitigation efforts.
- Full-year GAAP earnings projections slightly below market consensus, suggesting possible volatility in reported results.