Church & Dwight Co., Inc. Q1 FY2026 earnings call

• Macro environment: Conditions dynamic, consumer backdrop mixed, but consumer resilient; employment stable, largest categories grew 3% in quarter. - Q1 results: Net sales increased 0.2% ahead of expectation, organic sales grew 5% above outlook, adjusted gross margin expanded 130 basis points to 46.4%, adjusted EPS 95 cents up 4.4% year over year. - U.S. consumer business: Innovation and distribution gains key drivers, new product launches expected to account for half of organic growth. - Litter: Arm & Hammer cat litter performed well, TheraBreath and Hero contributed. - Touchline: Impacted by prior holiday sales. - International: Up 3.7% organic sales, upgraded ERP system went live in April

U.S. consumer business: Organic sales increased 5.4%, primarily volume-driven, with brands like TheraBreath, Arm & Hammer, Hero, and OxiClean leading growth; global e-comm represents ~24% of total consumer sales. Litter: Arm & Hammer cat litter consumption grew 6.8% with share at 24.6%; OxyClean share declined but trends improved; TheraBreath had record share gains; Hero consumption growth outpaced category. Touchline: Consumption grew low double digits but impacted by prior holiday multi-pack sell-through. International: Organic sales growth at 3.7%, driven by GMG and subs, led by TheraBreath, Hero, and Batiste brands, partially offset by lower Middle East regional sales

• Full-year 2026 outlook: Reiterated organic growth of approximately 3% to 4%, reported sales growth to decline approximately 1.5% to 0.5% due to 2025 portfolio actions; expected four-year gross margin expansion of ~100 basis points vs 2025; adjusted EPS expectation 5% to 8% growth. - Second quarter: Expected reported sales decline ~1%, organic sales growth ~3%, gross margin expansion ~50 basis points, adjusted EPS $0.88 per share

• Middle East situation creates incremental volume and inflationary pressure on commodities and transportation costs, estimated $25 to $30 million incremental inflation pressure

Q: Chris Carey asked about distribution gains and Q1's impact on go-forward top-line, volume-driven results.

A: Q1 had phenomenal organic growth, with tailwind from inventory and retail inventory dynamics, distribution gains at ~10% to 11% which is double CPG peers.

Q: Chris Carey followed up on Touchline growth sustainability.

A: Consumption slowed partly due to holiday gift sets and club class channel, but still expect double-digit growth for full year with great ratings and low household penetration.

Q: Anna Lazul asked about portfolio actions, Touchline channels, and M&A focus.

A: Team always looking for M&A, Touchline channels like club class and Amazon doing well, portfolio viewed positively.

Q: Rupesh Parikh asked about updated organic sales growth expectations by segment and consumer behavior.

A: Maintaining 3% to 4% outlook, U.S. ~3%, international ~7% (softer due to Middle East), SPD ~5%; consumer behavior shows promotional levels up in laundry but value segment growing.

Q: Javier Escalante asked about commodity backdrop, oil derivatives in COGS, and gross margin expansion.

A: $25 to $30 million full-year impact from Middle East conflict on commodities, primarily oil-based derivatives; team focused on productivity to offset, outlook reiterated.

Q: Olivia asked about top-line positive surprises and growth in club and online channels.

A: Broad-based improvement across globe, strong performance online and in club class with great brands.

Q: Lauren Lieberman asked about consumer's ability to absorb pricing.

A: Consumer pressed, no plans to raise prices, will offset headwind with productivity.

Q: Steve Powers asked about external dynamics and pricing in different portfolio parts.

A: $25 to $30 million headwind offset by productivity; if higher, look at RGM on promotions, then potential pricing; consumer not receptive to price increases at current levels.

Q: Andrea asked about inventory dynamics and pricing to mitigate costs.

A: 25 to $30 million headwind offset by productivity; normal sequence of actions for higher costs.

Q: Peter Grom asked about category growth and evolution.

A: Category growth in quarter was ~3%, better than expected, many categories growing 2.5% to 3%