Church & Dwight sees FY24 adjusted EPS growth 7%-9%, consensus $3.41

Farrell stated, “We exited 2023 with strong consumption growth across the majority of our categories. We are confident about 2024 and remain focused on offering high quality products to consumers at the right value. We are evolving our long-term Evergreen business model in 2024. The last revision was in 2018. Our new annual Evergreen model reflects our expectation of faster topline growth, greater margin expansion, and a higher cadence of growth investment, specifically in ecommerce and international. The revised evergreen model calls for 4% organic net sales growth (previously 3%), 25 to 50 basis points of gross margin expansion (previously 25 bps), marketing as a percentage of sales continues to approximate 11% (no change), and SG&A leverage of 0-25 bps (previously 25 bps) reflecting investments which will help sustain accelerated growth for years to come. We are maintaining our 8% industry leading annual EPS growth target. In 2024 we expect full year reported and organic sales growth to be approximately 4-5%.1 The organic sales outlook excludes Megalac from both years and the impact from foreign currency. We expect full year reported gross margin to expand approximately 50 to 75 basis points versus 2023. We expect an increase in manufacturing costs primarily due to capacity related investments, third party manufacturing cost increases, and moderate commodity inflation. We expect to more than offset our cost increases through carryover product pricing, mix, higher volume and productivity. We expect marketing as a percentage of sales to be approximately 11% and we expect to leverage SG&A while making investments in our International and ecommerce infrastructure. Our Adjusted EPS expectation for 2024 is 7-9% growth (mid-point $3.42 Adjusted EPS), inclusive of a 1% EPS drag related to exiting the MEGALAC business. Excluding the MEGALAC impact, Adjusted EPS growth expectation is 8-10%. Our tax rate is expected to increase 170 bps to approximately 23%. The higher tax rate represents a 2% drag to Adjusted EPS. This outlook reflects strong operating fundamentals including organic sales growth, volume growth, margin expansion and operating income growth. Other expense for 2024 is expected to be approximately $85 million, compared to $90 million in 2023.”