Church & Dwight Co. Inc. (CHD) filed Quarterly Report for the period ended 2009-09-25.
Church & Dwight Co Inc. is the world's leading producer of sodium bicarbonate (baking soda) a versatile chemical which performs a broad range of functions such as cleaning deodorizing leavening and buffering. The Company specializes in sodium bicarbonate and sodium bicarbonate-based products along with other products which use the same raw materials or technology. They sell their products primarily under the ARM & HAMMER(R) trademark to consumers through supermarkets drug stores and mass merchandisers;and to industrial customers/distributors. Church & Dwight Co. Inc. has a market cap of $4.1 billion; its shares were traded at around $58.31 with a P/E ratio of 18.4 and P/S ratio of 1.7. The dividend yield of Church & Dwight Co. Inc. stocks is 1%. Church & Dwight Co. Inc. had an annual average earning growth of 22.9% over the past 10 years. GuruFocus rated Church & Dwight Co. Inc. the business predictability rank of 5-star.
Highlight of Business Operations:
Selling, general and administrative expenses (“SG&A”) were $86.8 million in the third quarter of 2009, an increase of $1.0 million as compared to the same period in 2008. The increase in SG&A in 2009 reflects increases in compensation costs and information systems costs partially offset by lower international costs due to foreign exchange rate fluctuations. In addition, third quarter 2008 SG&A reflected charges related to the divestiture of the Spain subsidiary. SG&A expenses for the first nine months of 2009 were $253.9 million, an increase of $8.9 million over the same period in 2008. The increase is primarily due to the items noted above, as well as higher amortization and operating costs related to the Orajel Acquisition for the first six months of 2009. Included in 2008 is the $3.0 million gain on the 2008 divestiture of Brotherton and the 2008 asset impairment charges of $5.4 million.
Specialty Products loss before income taxes was $0.6 million in the third quarter of 2009, a decrease of $5.9 million as compared to the same period in 2008. Specialty Products income before income taxes for the first nine months of 2009 was $12.9 million, a decrease of $8.1 million as compared to the same nine month period of 2008. The decline in income in the third quarter and first nine months of 2009 reflect the asset impairment charge and environmental remediation charge at one of the Company s international subsidiaries totaling approximately $7.0 million, and lower income due to lower volumes. The results for the nine month period of 2008 included a $3.0 million gain associated with the sale of Brotherton.
As of September 25, 2009, the Company had $419.2 million in cash, $85.0 million available through its $115.0 million accounts receivable securitization facility, approximately $96 million available under its $100.0 million revolving credit facility and a $250.0 million accordion feature that enables the Company to increase the principal amount of its term loan. To enhance the safety of its cash resources, the Company invests its cash primarily in government agency money market funds.
The Company had outstanding total debt of $835.5 million and cash of $419.2 million (of which approximately $49.0 million resides in foreign subsidiaries) at September 25, 2009. Total debt less cash (“net debt”) was $416.3 million at September 25, 2009. This compares to total debt of $856.1 million and cash of $198.0 million, resulting in net debt of $658.1 million at December 31, 2008.
On June 5, 2008, the Company announced plans to construct a new laundry detergent manufacturing plant and distribution center in York County, Pennsylvania and to close its existing laundry detergent manufacturing and distribution facility in North Brunswick, New Jersey. The Company anticipates that capital expenditures in connection with construction of the new facility, which began production of certain products in September 2009 and is expected to be fully operational by the end of 2009, will be approximately $142 million, cash expenditures relating to the closing of the North Brunswick facilities will amount to approximately $11 million, and cash transition expenses in the new facility will be approximately $6 million. To build the plant and distribution center, the Company spent approximately $51 million in 2008 and approximately $68 million in the first nine months of 2009, and anticipates spending an additional $23 million during the remainder of 2009. The Company estimates it also will spend approximately $4 million in 2009 and $3 million in 2010 in connection with closing the North Brunswick facility. The majority of $4 million in severance payments will be made in 2010. The transition costs for the York facility will be incurred principally in 2009. The costs will be funded using the Company s existing credit facilities and available cash. See Note 17 to the condensed consolidated financial statements included in this report for additional information.
Net Cash Used in Financing Activities – Net cash used in financing activities during the first nine months of 2009 was $37.1 million. This reflects a net decrease in debt of $21.4 million resulting from mandatory payments on the Term Loan of $50.9 million and payments of cash dividends of $22.5 million. These cash decreases were partially offset by an increase in short term borrowings of $29.0 million associated with the Company s accounts receivable securitization facility and by proceeds of and tax benefits from stock option exercises of $7.2 million.
CHD is in the portfolios of Ron Baron of Baron Funds, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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