Church & Dwight Co. Inc. (NYSE:CHD) posted fourth-quarter sales of $670.8 million for the three months ended Dec. 31, 2009, up 4 percent compared with $644.9 million during the same period in 2008. Net income rose 19.3 percent to $52.8 million, compared with $44.2 million during Q4 2008:

Press Release

Church & Dwight Reports 2009 Earnings Per Share of $3.41

PRINCETON, N.J.–(BUSINESS WIRE)–Church & Dwight Co., Inc. (NYSE:CHD) today announced that full-year 2009
reported earnings per share increased 23% to $3.41 per share compared to
$2.78 per share in the prior year. Earnings per share increased 22% to
$3.48 per share, excluding the previously announced plant restructuring
charges of $0.24 per share in 2009 ($0.08 in 2008) and a favorable legal
settlement of $0.17 per share in 2009.

“We are currently forecasting earnings
per share to be in the range of $3.93 to $4.00 in 2010, which is an
increase of 13% to 15%, excluding plant restructuring charges and the
favorable litigation settlement in 2009.”

Full year 2009 sales increased 4.1% to $2,520.9 million from $2,422.4
million in 2008. Organic sales growth for 2009 was 4.7% for the total
Company and 6.8% for our total domestic and international consumer
business, excluding the impact of foreign exchange rate changes,
acquisitions and divestitures.

Full year 2009 cash flow from operating activities increased 19% to $401
million compared to $336 million in 2008. Free cash flow (defined as net
cash from operating activities less capital expenditures) was up 12% to
$266 million versus $238 million in the prior year. The increase in free
cash flow is primarily related to higher net income and improved working
capital management, partially offset by higher capital expenditures.

James R. Craigie, Chairman and Chief Executive Officer, commented, “We
are very proud of the business results and strategic initiatives that we
accomplished in 2009. Despite a challenging economic environment, we
delivered exceptional organic sales growth, record gross margin
expansion, record free cash flow, and exceptional EPS growth. We also
significantly increased our marketing support and increased market share
for 6 of our 8 power brands. Finally, we began production in our new
integrated laundry detergent manufacturing plant and distribution center
in York County, Pennsylvania, that will support continued strong revenue
growth and margin improvement for our laundry detergent business.”

Fourth Quarter Review

Reported earnings per share in the fourth quarter increased 19% to $0.74
per share compared to $0.62 per share in the prior year. Excluding the
previously announced restructuring charges of $0.09 per share in 2009
and $0.04 per share in 2008, earnings per share increased 26% to $0.83
per share. Reported net sales for the fourth quarter increased 4.0% to
$670.8 million. Organic sales grew 2.8% for the total Company and 4.9%
for our total domestic and international consumer business. These
organic sales results were on top of a 10.6% total Company organic sales
growth achieved in the fourth quarter of 2008.

Consumer Domestic sales were $493.8 million, a $16.1 million increase or
3.4% above the prior year fourth quarter sales. Fourth quarter organic
sales increased by 4.5% as a result of higher sales of the following
brands: TROJAN, ARM & HAMMER Super Scoop cat litter, OXICLEAN Laundry
Additive, KABOOM bathroom cleaner and SPINBRUSH. Liquid laundry
detergent growth moderated in the fourth quarter, reflecting a planned
reduction in trade promotion which contributed to a smooth transition to
our new liquid laundry manufacturing facility. As noted later, this new
facility is now in full production and normal trade promotion support
for our liquid laundry detergent business was restored in Q1 2010.

Consumer International sales were $112.1 million, a $17.0 million
increase or 17.9% above the prior year fourth quarter sales. Favorable
foreign exchange rate changes impacted net sales by 10.5%. Fourth
quarter organic sales increased by 7.2%, primarily driven by increases
in Canada, Australia and Brazil.

Specialty Products sales were $64.8 million, a $7.3 million decrease or
10.1% below the prior year fourth quarter sales and include the impact
of favorable foreign exchange rate changes of 3.4%. Excluding the effect
of foreign exchange rate changes, organic sales for the fourth quarter
decreased by 13.5%, primarily due to continuing lower U.S. milk
prices that have resulted in significantly lower volumes in the animal
nutrition business.

Gross margin increased to 42.5% in the fourth quarter compared to 39.4%
in the same quarter last year. Excluding the plant restructuring charge
reflected in cost of sales ($10.7 million in 2009 and $4.4 million in
2008), gross margin was 44.1% in the fourth quarter, a 400 basis point
improvement over the 40.1% gross margin in the prior year fourth
quarter. The increase in gross margin reflects lower commodity costs,
price increases and the benefits of cost reduction programs.

Marketing expense was $93.3 million in the fourth quarter, an $11.6
million increase over the prior year fourth quarter. The increased
marketing spending was focused on the Company’s eight power brands.
Marketing expense as a percentage of net sales increased 120 basis
points to 13.9% in the quarter compared to 12.7% in last year’s fourth
quarter.

Selling, general, and administrative expense (SG&A) was $100.6 million
in the fourth quarter, an $8.4 million increase over the prior year
fourth quarter. SG&A as a percentage of net sales was 15.0% in the
quarter, an increase of 70 basis points from the prior year fourth
quarter. The increase in SG&A is attributed to higher costs for research
and development, compensation and information systems and foreign
exchange rate changes in the quarter.

Operating income increased 14.0% to $91.3 million in the fourth quarter
compared to $80.1 million in the prior year fourth quarter. Operating
margin expanded 120 basis points to 13.6%. Excluding the plant
restructuring charges, operating margin expanded 210 basis points to
15.2%.

The effective tax rate in the fourth quarter was 38.0% compared to 37.5%
in the prior year fourth quarter.

Net Debt and Free Cash Flow

At December 31, 2009, the Company had net debt of $369 million (total
debt of $816 million less cash of $447 million) compared to net
debt at December 31, 2008 of $658 million (total debt of $856 million
less cash of $198 million). The leverage ratio of total debt to Adjusted
EBITDA (as defined in the Company’s principal credit agreement) is 1.6x
for the twelve months ended December 31, 2009. Capital expenditures for
the full year 2009 were approximately $135 million and included
approximately $85 million related to the construction of the new laundry
detergent manufacturing plant and warehouse in York County,
Pennsylvania. Free cash flow was $339 million for the full year 2009,
excluding the capital expenditures for the new Pennsylvania facility and
the favorable litigation settlement.

New Manufacturing Plant and
Distribution Center

The Company has completed its new integrated laundry detergent
manufacturing plant and distribution center in York County, Pennsylvania
and closed the Company’s North Brunswick, New Jersey complex. The new
facility opened and began production ahead of schedule in the third
quarter of 2009. The new facility is expected to be a significant
contributor to gross margin expansion in 2010, and will support the
Company’s expectations of continued strong revenue growth for its
laundry detergent business.

The project resulted in plant restructuring charges of $10.7 million or
$0.09 per share in the fourth quarter and $4.4 million or $0.04 per
share in the prior year fourth quarter. These charges relate primarily
to accelerated depreciation of the North Brunswick complex, severance
and other one-time costs associated with the closing of these facilities.

Outlook for 2010

With regard to 2010, Mr. Craigie said, “We are very proud of our
outstanding performance in 2009 despite a difficult economic environment
that was compounded by increased retailer emphasis on private label and
SKU reduction. Our strong results reflect the strength of our diverse
product portfolio, consisting of both leading premium brands and value
brands, our increased marketing investment, our tight cost controls and
our strong relationships with our retail partners. In 2010, we expect
this winning strategy, and an outstanding new product line-up, to
deliver projected organic sales growth of approximately 4-5%. On top of
the extraordinary gross margin gains achieved in 2009, we expect
continued margin expansion in 2010 which will be driven largely by the
efficiencies from our new liquid laundry detergent facility in
Pennsylvania. We also will be making a significant investment in 2010 to
support a global information systems project that will strengthen our
cost management capabilities. Finally, we are in an excellent position
to pursue acquisition opportunities due to our strong balance sheet and
free cash flow.”

In conclusion, Mr. Craigie said, “We are currently forecasting earnings
per share to be in the range of $3.93 to $4.00 in 2010, which is an
increase of 13% to 15%, excluding plant restructuring charges and the
favorable litigation settlement in 2009.”