Executive Summary / Key Takeaways

• Church & Dwight (CHD) delivered strong Q3 2025 results, with organic sales growth of 3.4% and adjusted EPS of $0.81, exceeding prior outlooks, driven by robust volume growth and gross margin expansion.
• The company's strategic focus on "power brands" like THERABREATH, HERO, and the newly acquired TOUCHLAND, coupled with continuous innovation, is driving significant market share gains and household penetration, even in a mixed consumer environment.
• Proactive portfolio management, including the recent acquisition of TOUCHLAND and the exit of underperforming businesses, is enhancing the company's growth profile and mitigating tariff exposure.
• Despite ongoing economic volatility and competitive pressures, Church & Dwight maintains a confident full-year 2025 outlook, projecting approximately 1% organic sales growth and adjusted EPS of $3.49, supported by increased marketing investments and operational efficiencies.
• The company's balanced portfolio of value and premium offerings, combined with its agile innovation engine, positions it for sustained market outperformance and strong cash flow generation.

A Legacy of Value and Innovation in Consumer Staples

Church & Dwight Co., Inc. (CHD) has carved out a formidable position in the consumer goods landscape since its founding in 1846, initially as a pioneer in sodium bicarbonate. Over nearly two centuries, the company has strategically evolved, building a diversified portfolio of household and personal care products that resonate with consumers seeking both value and performance. Its "power brand" strategy, encompassing eight key brands including ARM & HAMMER, OXICLEAN, THERABREATH, HERO, and the recently acquired TOUCHLAND, represents approximately 70% of its net sales and profits, underscoring a focused approach to market leadership.

The company's competitive strength is not merely in its long-standing brands but in its innovation prowess and agile product development. Church & Dwight consistently leverages its R&D capabilities to introduce problem-solution brands that drive category expansion and capture market share. For the first nine months of 2025, R&D expenses totaled $104.80 million, reflecting a sustained commitment to this differentiator. This innovation engine is a critical driver of market share gains and contributes significantly to the company's organic growth, accounting for approximately half of it in recent years.

For instance, THERABREATH, a standout performer, is extending its reach with a new line of toothpaste, set for a retail launch in January 2026. This expansion builds on the brand's success as the #2 mouthwash with a 21.8% market share, despite the overall mouthwash category declining in Q3 2025. THERABREATH's household penetration currently stands at 11% compared to the category's 65%, indicating substantial runway for growth through continued innovation and market penetration. Similarly, the HERO brand, a leader in acne care with a 23.6% market share, continues to innovate with solutions like the Mighty Patch Body, entering the growing body care segment in 2025. HERO's household penetration is 9% versus the acne category's 28%, highlighting the effectiveness of its differentiated product offerings in attracting new users. Even established brands like TROJAN are seeing innovation, with the launch of TROJAN G.O.A.T. (Greatest of All TROJAN), a non-latex condom featuring patent-pending Ultra Flex material designed for enhanced intimacy. These examples demonstrate Church & Dwight's ability to consistently bring differentiated, high-performing products to market, translating directly into competitive advantages and sustained growth.

Competitive Landscape and Strategic Positioning

Church & Dwight operates within a highly competitive consumer goods market, vying with industry giants such as Procter & Gamble (PG), Colgate-Palmolive (CL), Kimberly-Clark (KMB), Clorox (CLX), and Unilever (UL). While these larger competitors often boast greater scale, broader global reach, and higher R&D budgets, Church & Dwight strategically positions itself through a balanced portfolio of value and premium offerings, coupled with its agile innovation. The company's market positioning often emphasizes accessible, specialized brands, contrasting with the broader, more premium-focused strategies of some rivals.

In the laundry detergent category, for example, ARM & HAMMER liquid laundry detergent consumption grew 1.9% in Q3 2025, outpacing a flat category and reaching a 15% share. This success is particularly notable given that the value tier was the only segment with positive consumption in Q3 2025, and Church & Dwight's promotional spending for laundry was lower year-over-year, while some competitors increased theirs by 300 to 600 basis points. This demonstrates Church & Dwight's ability to capture price-sensitive consumers through its strong value proposition, even against competitors whose products can be twice the cost.

In cat litter, ARM & HAMMER litter consumption grew 5.3% in Q3 2025, slightly outpacing the category's 5% growth, despite heightened competitive promotions, particularly in the lightweight segment where one competitor's "sold-on deal" exceeded 40%. Church & Dwight's strategy here is to focus on innovation, such as its new lightweight ARM & HAMMER Clumping Litter, rather than engaging in a "race to the bottom" on promotions. This approach allows the company to maintain profitability while selectively investing in new product development to drive share in growing sub-segments.

The acquisition of TOUCHLAND in July 2025 further exemplifies Church & Dwight's strategic agility. TOUCHLAND, the fastest-growing brand in the U.S. hand sanitizer category and the #2 overall, is performing "fantastically well," exceeding initial expectations with double-digit consumption growth in Q3 2025. Its household penetration is just under 7% versus the category's 42%, indicating significant growth potential. This brand's distribution is concentrated in prestige retailers like Sephora, Ulta, and Amazon, a focused strategy that Church & Dwight intends to maintain, leveraging the brand's cachet and exploring international expansion. This targeted approach allows Church & Dwight to compete effectively in niche, high-growth segments without directly confronting the broad portfolios of larger rivals.

Financial Performance and Liquidity

Church & Dwight's financial performance in Q3 2025 showcased resilience and strategic execution. The company reported net sales of $1,585.60 million, a 5.0% increase year-over-year, with organic sales growing 3.4%, surpassing its outlook of 1% to 2%. This growth was largely driven by a robust 4.0% increase in volume, partially offset by a negative price/mix of 0.6%. Adjusted EPS reached $0.81, outperforming the $0.72 outlook by $0.09.

Gross profit for Q3 2025 was $714.40 million, an increase of $31.30 million, with the adjusted gross margin expanding by 10 basis points to 45.1%. This improvement was primarily due to 170 basis points from productivity programs, 20 basis points from higher-margin acquisitions, 10 basis points from foreign exchange, and 10 basis points from favorable volume, price, and mix. These gains effectively offset 200 basis points of inflation and tariff costs. For the first nine months of 2025, however, gross margin decreased by 170 basis points, impacted by costs related to exiting businesses (70 bps) and prior-year tariff refunds (70 bps). Excluding these, the decline was 30 basis points, primarily from higher manufacturing costs and unfavorable price/mix/volume, partially mitigated by productivity and Touchland benefits.

Marketing expenses in Q3 2025 increased by 9.2% to $202.90 million, representing 12.8% of net sales, up 50 basis points from the prior year. This increased investment reflects the company's strategy to support brand growth and new product launches. Selling, general, and administrative (SGA) expenses rose 10.9% to $256.90 million, or 16.2% of net sales, primarily due to the Touchland acquisition.

The company maintains a strong liquidity position. As of September 30, 2025, cash and cash equivalents stood at $305.30 million, with approximately $1,993 million available through its revolving credit facility and commercial paper program.

Net cash provided by operating activities for the nine months ended September 30, 2025, was $852 million. The cash conversion cycle improved by six days, driven by better inventory management and extended payment terms with vendors. Investing activities for the period included $656.40 million for the Touchland acquisition and $67.20 million for property, plant, and equipment. The company also returned capital to shareholders, with $600 million in share repurchases and $216.40 million in cash dividends for the nine months ended September 30, 2025. The quarterly dividend was increased by 4% to $0.29 per share in January 2025.

Outlook and Risks

Church & Dwight's management has provided an updated full-year 2025 outlook, reflecting confidence in its strategic initiatives despite a volatile macro environment. The company now expects reported sales growth of approximately 1.5% and organic sales growth of approximately 1%. Full-year gross margin is projected to contract by only 40 basis points versus 2024, an improvement from earlier estimates, due to effective productivity programs countering inflation and tariff headwinds. Marketing as a percentage of sales is expected to exceed 11%, demonstrating a commitment to brand investment. Adjusted EPS for the full year is now forecast at $3.49, an increase from previous guidance. Cash flow from operations is also expected to be strong, at approximately $1.2 billion.

For Q4 2025, the company anticipates reported sales growth of approximately 3.5% and organic sales growth of approximately 1.5%. However, the reported sales outlook includes a $30 million (200 basis points) drag from discontinued businesses as inventory runs out, and organic growth will be impacted by prior-year comparisons related to a port strike and negative consumption trends in the VMS business. Adjusted gross margin is expected to contract by approximately 50 basis points in Q4, primarily due to inflation and tariff costs.

Several risks could impact this outlook. The broader economic environment remains volatile, with consumer confidence showing periods of decline and household finances stretched by high borrowing costs. This could lead to elevated promotional intensity and shifts in discretionary spending. The company's global WATERPIK business, for instance, has experienced declining demand due to lower consumer spending and a shift to value-branded products, exacerbated by tariffs.

The vitamin business (VITAFUSION and LIL CRITTERS) continues to be a drag on organic growth, with consumption down significantly due to intense competition. The company is undertaking a strategic review, exploring options ranging from streamlining operations to divestiture. While green shoots are observed in the multivitamin segment and new innovation is expected, the outcome of this review by the end of 2025 will be critical. Furthermore, while tariff exposure has been significantly mitigated from an initial gross projection of $190 million to a net 12-month run-rate of approximately $25 million, the situation remains fluid, requiring ongoing supply chain efforts and potential surgical pricing.

Conclusion

Church & Dwight's Q3 2025 performance underscores its enduring strength and strategic agility in a challenging consumer landscape. The company's core investment thesis rests on its ability to consistently generate growth and shareholder value through a diversified portfolio of essential household and personal care brands, a relentless focus on innovation, and disciplined capital allocation. The strategic acquisition of high-growth brands like TOUCHLAND and the decisive exit from underperforming businesses demonstrate a proactive approach to portfolio optimization, enhancing the company's overall growth profile and mitigating external headwinds.

Despite the ongoing economic uncertainties and competitive pressures, Church & Dwight's commitment to investing in its power brands, driving household penetration through innovation, and maintaining operational efficiencies positions it favorably. The company's technological leadership, manifested through its agile product development and R&D initiatives, is a key differentiator that enables it to gain market share and outpace category growth. While the strategic review of the vitamin business and the fluidity of the tariff environment present areas for continued monitoring, the company's strong liquidity, consistent cash flow generation, and clear strategic roadmap suggest a resilient future. Investors can anticipate Church & Dwight to continue leveraging its balanced portfolio and innovation engine to deliver sustained performance and long-term value.