Church & Dwight Co., Inc. (NYSE:CHD) today reported net income for the quarter ended September 30, 2013 of $107.9 million or $0.76 per share, compared to net income of $93.9 million or $0.66 per share for the same period in 2012. Earnings per share increased 15.2%.
Third Quarter Review
Reported net sales for the third quarter increased 11.0% to $804.8 million, driven largely by the Avid gummy vitamin business acquired on October 1, 2012. Organic sales increased 1.6%, the midpoint of the Company’s outlook of 1 to 2%. The increase is driven by 4.7% volume growth, partially offset by 3.1% unfavorable product mix and pricing.
James R. Craigie, Chairman and Chief Executive Officer, commented,
“We are pleased with our third quarter business results. Despite continuing weak category consumption in the U.S., we delivered 15.2% EPS growth, while increasing market share for seven of our nine power brands.”
net sales were $605.3 million, a $74.9 million or 14.1% increase over the prior year third quarter sales. Third quarter organic sales, which excludes the gummy vitamin business, increased by 0.8%, primarily due to higher sales of ARM & HAMMER liquid laundry detergent, OXICLEAN laundry additives, TROJAN products, and FIRST RESPONSE diagnostic kits. This increase was partially offset by lower sales of ARM & HAMMER powder laundry detergent, ARM & HAMMER cat litter, NAIR depilatories, and SPINBRUSH battery-powered toothbrushes. Volume growth contributed 4.5% to the increase in sales, partially offset by 3.7% unfavorable product mix and pricing.
net sales were $134.5 million, a $3.4 million or 2.6% increase over the prior year third quarter sales. Third quarter organic sales increased by 3.7%, primarily due to stronger sales in Canada, France, Mexico, and the UK. The increase was entirely driven by volume gains.
net sales were $65.0 million, a $1.3 million or 2.0% increase over the prior year third quarter sales. Third quarter organic sales increased by 3.7%. Volume growth drove a 7.9% increase in sales, partially offset by 4.2% unfavorable product mix and pricing.
expanded 20 basis points to 45.4% in the third quarter, the fifth consecutive quarter of gross margin improvement, due to productivity programs, partially offset by unfavorable price/mix. The majority of commodity costs were flat in the quarter versus the prior year third quarter.
was $99.7 million in the third quarter, a $7.5 million or 8% increase over the prior year third quarter reflecting increased investment in power brands to gain market share. Marketing expense as a percentage of net sales was 12.4%, a 30 basis points decrease from the prior year third quarter.
Selling, general, and administrative expense (SG&A)
was $97.7 million in the third quarter, a $7.8 million increase from the prior year third quarter primarily due to the inclusion of the gummy vitamin business. SG&A as a percentage of net sales was 12.1%, a 30 basis point decrease from the prior year third quarter.
Income from operations
was $167.8 million in the third quarter, a $22.4 million or 15.4% increase over the prior year third quarter. Operating income as a percentage of net sales was 20.8%, an 80 basis point increase over the prior year third quarter.
The effective tax rate
in the third quarter was 33.9%, compared to 35.7% in the prior year third quarter. The Company expects the full year effective tax rate to be approximately 34%.
For the first nine months of 2013, net cash from operating activities was $376.6 million, a $60.7 million increase from the prior year period, including a $36 million deferral of the December 2012 estimated federal tax payment to January 2013 as a result of Hurricane Sandy relief. The increase is primarily attributed to higher earnings and increase in accruals. Capital expenditures were $30.3 million, a $19.4 million decrease from the first nine months of 2012 which included the construction of the Company’s Victorville, California plant. Full year capital expenditures are estimated to be approximately $70 million.