Benzinga | Jul 30, 2021 11:09AM EDT

Church & Dwight Manages To Top Q2 Estimates; Warns On Supply Issues

* Church & Dwight Co Inc (NYSE:CHD) reported second-quarter FY21 net sales growth of 6.4% year-on-year, to $1.27 billion, beating the analyst consensus of $1.26 billion.

* Net sales from Household Products decline 4.0% to $523.0 million, and Personal Care Products rose 13% to $436.7 million.

* Consumer Domestic net sales increased 3.1% to $959.7 million, and Consumer International sales rose 21% to $226.8 million.

* Gross profit fell 1.3% Y/Y to $552.2 million, and gross margin decreased 340 basis points to 43.4% due to the impact of higher distribution costs and higher manufacturing costs related to commodities and higher tariffs.

* Selling, general and administrative expenses contracted 26.8% Y/Y to $136.5 million. Adjusted SG&A margin was 13.7%, a decrease of 140 basis points due to lower litigation costs and lower incentive compensation.

* The operating margin was 23.5%, and operating income for the quarter rose 19.1% to $298.7 million.

* The company held $149.8 million in cash and equivalents as of June 30, 2021. Net cash from operating activities decreased 42.5% to $344.3 million for six months.

* Adjusted EPS of $0.76 beat the analyst consensus of $0.70.

* "In the second quarter, we experienced shortages of many key raw materials. Labor shortages at suppliers and third-party manufacturers and transportation challenges have resulted in supply issues," said CEO Matthew Farrell.

* Outlook: Church & Dwight sees Q3 sales growth of approximately 3.0% and organic sales growth of 1.5% due to supply chain constraints. It sees Q3 adjusted EPS of $0.70 versus the consensus of $0.83.

* For FY21, the company sees a net sales growth of ~5% (prior +5-6% growth); organic sales growth of ~4% (prior +4-5% growth).

* It sees Adjusted EPS at the lower end of the prior 6-8% range of $3.00-$3.06, versus the consensus of $3.03.

* Price action: CHD shares are trading higher by 0.23% at $87.11 on the last check Friday.