Church & Dwight Co. Inc. (NYSE:CHD) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 12:30 pm ET


Church & Dwight Co. Inc. (NYSE:CHD) Q4 2014 Earnings Conference Call - Final Transcript


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Good afternoon, ladies and gentlemen, and welcome to the (Technical Difficulty) Don't forget, 84% of our revenues and almost 90% of our profits come from the United States. A huge advantage right now. Foreign exchange headwinds are huge. It's 2.5% for us but you've heard in the past week or two a 10% headwind for Colgate, 12% for Procter and Gamble, and I heard Newell Rubbermaid the other day report an even bigger number. So these kinds of phases. I would challenge on one thing today. A lot of you have seen your reports are acting as if this is a one-year wonder. I don't get that. Why do you think the US dollar is apparently going to weaken in 2016, or the foreign currencies are going to strengthen? And I'd ask you a second question. A lot of our competitors that deal with this are raising prices in the foreign economies.

Don't you think that's going to have an impact on their consumption? The consumers in those marketplace don't have more money. And their competitors who are raising their prices to offset some of these headwinds -- hello, if you don't think it's going to hurt consumption I think you ought to think about it again. Not a big problem for us. Second big driver of our total shareholder return strategy is we have a successful mega brand share growth formula.

Now, our share growth formula is not anything new from competition. There's innovative new products. You add to that increased marketing spending, increased distribution, that leaves us share growth. That formula is as old as stone but we do it exceptionally well. First of all, you can see, since we created a new product team back in 2007, we've had a great track record on driving revenue growth on new products. Today almost 40% of our revenues in 2014 came from new products launched since 2007. You'd be a little bit surprised by this chart -- what we spend behind our products.

Church & Dwight, despite being only a $3 billion, $3.5 billion company, small compared to the other guys on this chart, we spend more on advertising than these major CPG companies. So, we spend big behind our product news. You take that together with new products and increased marketing spending and you get increased distribution. Lou Tursi, our head of sales here, and his sales team did an outstanding job taking that product news and the spending out to retailers. The retailers appreciate it, they give us more distribution.

Winning the shelf is the first war you want to win out there in gaining share and we've done a great job across all our major brands here; sometimes almost doubling space since 2009, like we have on laundry detergent and cat litter. You put that altogether and it leads to share growth. You can see from this chart, going back to 2008, the green bars on the chart show share gains, the red charts is share losses,