CHURCH & DWIGHT CO INC /DE/ MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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RECENT DEVELOPMENTS

COVID-19 and other related recent developments

The COVID-19 pandemic continues to impact our business. During the onset of the
pandemic, demand for many of our brands was impacted by "stay at home" orders
and the temporary and permanent closure of certain retailers. As government
restrictions were reduced or removed and stimulus actions, primarily in the US,
benefitted consumers, we started to experience an increase in demand for many of
our brands. More recently, the impacts to our business have been primarily
supply chain related, including labor shortages and challenges with distribution
and transportation, resulting in difficulty meeting customer demand and
significant broad-based cost inflation. In addition, recent government
restrictions in China have further exacerbated global supply chain challenges
and may also have a negative impact on demand for certain of our products in
China, because many Chinese consumers are restricted to their homes, thereby
reducing consumer in-store foot traffic and delivery services. While it is
difficult to predict with certainty when these challenges might subside, we
expect shortages to continue at least through the first half of 2022 and input
cost inflation to continue at least throughout 2022.

To attempt to offset some of the cost pressures we are experiencing, we have
recently enacted and continue to evaluate price increases. In addition, to
address challenges meeting customer demand, we have taken steps to increase our
short-term manufacturing capacity for many of our products (including laundry
detergent, baking soda, cleaners and vitamins) as well as our raw material and
packaging capacity, and continue to work closely with our suppliers, contract
manufacturers and retail partners to increase capacity and ensure sustained
supply to keep pace with increased demand. We have also made investments in the
expansion of long-term, in-house and third-party manufacturing capacity and are
working to enlist additional suppliers that meet our quality specifications.
While we expect supply availability issues to start improving in the second half
of 2022 for most of our brands, there is no assurance that these challenges will
abate in the foreseeable future or that our customers will accept all or a
portion of any price increases, or that the other measures we have or may
implement will mitigate the impact of supply disruptions or rising costs.

Looking forward, the extent that COVID-19 and other recent developments' have on
our operational and financial performance will depend on future developments,
including the duration, spread and intensity of the pandemic, the spread and
severity of new variants, the long-term impact of vaccines, and our continued
ability to obtain an adequate supply of materials and recruit and retain a
workforce and engage third-parties to manufacture and distribute our products,
as well as any future government actions affecting employers and employees,
consumers and the economy generally, all of which are uncertain and difficult to
predict considering the rapidly evolving landscape. Our priorities during the
COVID-19 pandemic continue to be protecting the health and safety of our
employees; maximizing the availability of products that help consumers with
their health, hygiene and cleaning needs; and using our employees' talents and
our resources to help society meet and overcome the current challenges.


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We are monitoring the impact of inflation and the COVID-19 pandemic, including the effect of corresponding government measures, such as raising interest rates to counter inflation, which may have a negative impact on consumer spending, and how these factors will potentially influence future cash flows for the short and long term. While we expect many of these effects to be transitory and our value-oriented portfolio positions us well in an inflationary and slowing economic environment, it is impossible to predict their impact.

Russia – Ukrainian War

The global economy has been negatively impacted by the military conflict between
Russia and Ukraine. Furthermore, governments in the U.S., United Kingdom, and
European Union have each imposed export controls on certain products as well as
financial and economic sanctions on certain industry sectors and parties in
Russia and Belarus. We have experienced shortages in materials and increased
costs for transportation, energy, and raw material due in part to the negative
impact of the Russia-Ukraine military conflict on the global economy. Further
escalation of geopolitical tensions related to the conflict, including increased
trade barriers or restrictions on global trade, could result in, among other
things, cyber attacks, supply disruptions, lower consumer demand, and changes to
foreign exchange rates and financial markets, any of which may adversely affect
our business and supply chain.

We have no operations in Russia or Ukraine. Sales into Russia and Belarus, which
have been suspended indefinitely, are not material to the Company's consolidated
net sales and earnings.


Results of Operations

                              Consolidated results



                                    Three Months Ended         Change vs.        Three Months Ended
                                      March 31, 2022           Prior Year          March 31, 2021
Net Sales                          $            1,297.2           4.7%          $            1,238.9
Gross Profit                       $              552.5           0.3%          $              550.9
Gross Margin                                       42.6 %   -190 basis points                   44.5 %
Marketing Expenses                 $              101.9           3.2%          $               98.7
Percent of Net Sales                                7.9 %   -10 basis points                     8.0 %
Selling, General & Administrative  $              169.9           13.6%         $              149.6

Expenses

Percent of Net Sales                               13.1 %   +100 basis points                   12.1 %
Income from Operations             $              280.7           -7.2%         $              302.6
Operating Margin                                   21.6 %   -280 basis points                   24.4 %
Net income per share - Diluted     $               0.83           -5.7%         $               0.88




Diluted net earnings per share were $0.83 in the first quarter of 2022 compared to $0.88 in the first quarter of 2021.

During the first quarter of 2021 we decreased the fair value of our business
acquisition liability associated with the 2019 acquisition of the FLAWLESS hair
removal business (the "Flawless Acquisition") by $19.0 ($14.3 after tax or $0.05
per diluted share), based on updated sales forecasts. The business acquisition
liability adjustment was recorded as a reduction in SG&A expense.


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Net sales

Net sales for the quarter ended March 31, 2022 were $1,297.2, an increase of
$58.3 or 4.7% as compared to the same period in 2021. The components of the net
sales increase are as follows:

                                    Three Months Ended
                                        March 31,
Net Sales - Consolidated                   2022
Product volumes sold                               (5.1 %)
Pricing/Product mix                                 7.8 %
Foreign exchange rate fluctuations                 (0.3 %)
Acquired product lines (1)                          2.3 %
Net Sales increase                                  4.7 %



(1)
On December 24, 2021, we acquired all of the outstanding equity of Dr. Harold
Katz, LLC and HK-IP International, Inc., the owners of the THERABREATH brand of
oral care products (the "TheraBreath Acquisition"). The results of this
acquisition are included in our results since the date of acquisition.

For the three months ended March 31, 2022, the volume change reflects decreased
product unit sales in the Consumer Domestic and Consumer International segments,
partially offset by increased product unit sales in the Specialty Products
("SPD") segments. For the three months ended March 31, 2022, price/mix was
favorable in all three segments.

Gross Profit / Gross Margin

Our gross profit was $552.5 for the three months ended March 31, 2022, a $1.6
increase as compared to the same period in 2021. Gross margin decreased 190
basis points ("bps") in the first quarter of 2022 compared to the same period in
2021, due to the impact of higher manufacturing costs including labor and
commodities of 450 bps, higher transportation costs of 100 bps, and unfavorable
foreign exchange of 10 bps, offset by favorable price/volume/mix of 270 bps, the
impact of productivity programs of 70 bps, and business acquisition benefits of
30 bps.

Operating Expenses

Marketing expenses for the three months ended March 31, 2022 were $101.9, an
increase of $3.2 or 3.2% as compared to the same period in 2021. Marketing
expenses as a percentage of net sales in the first quarter of 2022 decreased by
10 bps to 7.9% as compared to 8.0% in the same period in 2021 due to 40 bps of
leverage on higher net sales, offset by 30 bps on higher expenses.

SG&A expenses were $169.9 in the first quarter of 2022, an increase of $20.3 or
13.6% as compared to the same period in 2021. SG&A as a percentage of net sales
increased 100 bps to 13.1% in the first quarter of 2022 as compared to 12.1% in
the same period in 2021. The increase is due to 160 bps on higher expenses,
offset by 60 bps of leverage associated with higher sales. The higher expenses
for the three-month period ended March 31, 2022 are primarily due to the prior
year reduction in the fair value of the Flawless business acquisition liability
of $19.0.

Other (income) expenses, net, were nominal for the three months ended March 31, 2022 and 2021.

Interest expense for the three months ended March 31, 2022 increased $2.6 to
$16.6, as compared to the same period in 2021, primarily due to higher average
debt outstanding.

Income Taxes

The effective tax rate for the three months ended March 31, 2022 was 23.2%, compared to 24.2% in the same period in 2021. The decrease in the tax rate is mainly due to the increase in the exercise of stock options.

Sector results

We operate three reportable segments: Consumer Domestic, Consumer International
and SPD. These segments are determined based on differences in the nature of
products and organizational structure. We also have a Corporate segment.

Segment                   Products
Consumer Domestic         Household and personal care products
Consumer International    Primarily personal care products
SPD                       Specialty chemical products




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The Corporate segment income consists of equity in earnings of affiliates. As of
March 31, 2022, we held 50% ownership interests in each of Armand Products
Company ("Armand") and The ArmaKleen Company ("ArmaKleen"), respectively. Our
equity in earnings of Armand and ArmaKleen, totaling $2.4 and $2.6 for the three
months ended March 31, 2022 and 2021, respectively, and are included in the
Corporate segment. Certain subsidiaries that are included in the Consumer
International segment manufacture and sell personal care products to the
Consumer Domestic segment. These sales are eliminated from the Consumer
International segment results set forth below.

Segment net sales and profit before income taxes for the three months ended
March 31, 2022 and March 31, 2021 are the following:


                                     Consumer         Consumer
                                     Domestic       International        SPD       Corporate(3)        Total
Net Sales(1)
First Quarter of 2022               $    995.1     $         214.6     $  87.5     $         0.0     $ 1,297.2
First Quarter of 2021                    942.4               216.4        80.1               0.0       1,238.9

Income before Income Taxes(2)
First Quarter of 2022               $    222.7     $          29.6     $  11.5     $         2.4     $   266.2
First Quarter of 2021(4)                 240.9                38.2         9.3               2.6         291.0


(1)
Intersegment sales from Consumer International to Consumer Domestic, which are
not reflected in the table, were $4.8 and $2.6 for the three months ended March
31, 2022 and March 31, 2021, respectively.

(2)

To determine earnings before income taxes, interest expense, investment income and certain aspects of other income and expenses have been allocated to the segments based on the relative operating income of each segment.

(3)

The Corporate segment includes equity in earnings of affiliates of Armand and ArmaKleen for the three months ended March 31, 2022 and March 31, 2021.

(4)

2021 results include a $19.0 reduction of SG&A expenses to reduce the Flawless
business acquisition liability, of which $16.1 was recorded to Consumer Domestic
and $2.9 was recorded to Consumer International.

Product line revenues from external customers are as follows:

                                Three Months Ended
                             March 31,      March 31,
                                2022           2021
Household Products           $    520.5     $    495.2
Personal Care Products            474.6          447.2
Total Consumer Domestic           995.1          942.4

Total International Consumer 214.6 216.4 Total SPD

                          87.5           80.1

Consolidated total Net sales $1,297.2 $1,238.9




Household Products include laundry, deodorizing, and cleaning products. Personal
Care Products include condoms, pregnancy kits, oral care products, skin care and
hair care products, cold and remedy products, and gummy dietary supplements.


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Domestic Consumer

Domestic net sales in the first quarter of 2022 were $995.1an augmentation of $52.7 i.e. 5.6% compared to the same period in 2021. The components of the change in turnover are as follows:

                               Three Months Ended
                                   March 31,
Net Sales - Consumer Domestic         2022
Product volumes sold                          (6.0 %)
Pricing/Product mix                            8.7 %
Acquired product lines (1)                     2.9 %
Net Sales increase                             5.6 %




(1)

Includes the acquisition of TheraBreath from the date of acquisition.

The increase in net sales for the three months ended March 31, 2022, reflects
the impact of the TheraBreath® Acquisition, and higher net sales in ZICAM™ zinc
supplements, OXICLEAN® Versatile Stain Remover, BATISTE® dry shampoo, ARM &
HAMMER® Cat Litter and ARM & HAMMER® Liquid Detergent, offset by declines in
FLAWLESS® Hair Removal Products, WATERPIK® Shower Heads, and XTRA® Liquid
Detergent.

In recent years our TROJAN business, specifically the condom category, had not
grown and competition has increased. Social distancing requirements due to the
COVID-19 pandemic had further negatively impacted the business. As a result, the
TROJAN business had experienced stagnant sales and profits resulting in a
reduction in expected future cash flows which eroded a portion of the excess
between the fair and carrying value of the tradename. This indefinite-lived
intangible asset may be susceptible to impairment risk and a continued decline
in fair value could trigger a future impairment charge of the TROJAN tradename.

While management has implemented strategies to address the risk, including
lowering our production costs, investing in new product ideas, and developing
new creative advertising, significant changes in operating plans or adverse
changes in the future could reduce the underlying cash flows used to estimate
fair value. More recently, TROJAN has experienced a recovery in sales and
profits as it is benefiting from an easing of COVID-19 social restrictions
leading to an increase in sexual activity. We expect this trend will continue
with the adoption of vaccines, the reduction of social distancing restrictions
and the benefit of management strategies to improve sales and profitability.

Consumer Domestic income before income taxes for the first quarter of 2022 was
$222.7, an $18.2 decrease as compared to the first quarter of 2021. The decrease
is due primarily to higher manufacturing and distribution expenses of $52.5, the
impact of lower sales volumes of $16.6, higher SG&A expenses of $15.8 (including
the prior year reduction in the fair value of the Flawless business acquisition
liability of $16.1), higher marketing expenses of $4.9 and higher interest and
other expenses of $2.4, partially offset by a favorable price/mix of $73.9.

International Consumer

Consumer International net sales were $214.6 in the first quarter of 2022, a
decrease of $1.8 or 0.8% as compared to the same period in 2021. The components
of the net sales change are the following:

                                    Three Months Ended
                                        March 31,
Net Sales - Consumer International         2022
Product volumes sold                               (3.6 %)
Pricing/Product mix                                 3.9 %
Foreign exchange rate fluctuations                 (1.9 %)
Acquired product lines (1)                          0.8 %
Net Sales decrease                                 (0.8 %)





(1)

Includes the acquisition of TheraBreath from the date of acquisition.

Excluding the impact of foreign exchange rates, sales were higher in the first
quarter ended March 31, 2022 for STERIMAR®, BATISTE, OXICLEAN, and VITAFUSION
and L'IL CRITTERS gummy vitamins in the Global Markets Group ("GMG") business.

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The positive performance of GMG was offset by volume declines in Canada, Mexico,
France and UK. International growth was also negatively impacted by international supply chain issues and laundry portfolio decisions in Canada.

Consumer International income before income taxes was $29.6 in the first quarter
of 2022, an $8.6 decrease as compared to the first quarter of 2021. Higher
manufacturing and commodity costs of $6.0, higher SG&A expenses of $3.4
(partially due to the prior year reduction in fair value of the Flawless
business acquisition liability of $2.9), the impact of lower sales volumes of
$3.2, unfavorable foreign exchange rates of $1.8 and higher interest and other
expenses of $0.2, were partially offset by a favorable price/mix of $5.0 and
lower marketing expenses of $0.8.

Specialty Products (“SPD”)

SPD net sales were $87.5 in the first quarter of 2022, an increase of $7.4 or
9.2% as compared to the same period in 2021. The components of the net sales
change are the following:

                      Three Months Ended
                          March 31,
Net Sales - SPD              2022
Product volumes sold                  1.1 %
Pricing/Product mix                   8.1 %
Net Sales increase                    9.2 %




Net sales increased in the first quarter of 2022 primarily due to higher pricing
in our dairy and specialty chemicals segments in response to rising costs and
higher volumes for our non-dairy segment.

The SPD’s income before income taxes was $11.5 in the first quarter of 2022, an increase of $2.2 compared to the same period in 2021, thanks to a favorable price/product mix of $6.5a $0.9 benefit from higher volumes, offset by unfavorable manufacturing costs of $4.5higher general and administrative costs $0.4and other higher expenses of $0.3.

Corporate

The Corporate segment includes equity in earnings of affiliates from Armand and
ArmaKleen in the three months of 2022 and 2021. The Corporate segment income
before income taxes was $2.4 in the first quarter of 2022, as compared to $2.6
in the same period in 2021.


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Cash and capital resources

On May 1, 2019, we amended the credit agreement (the "Credit Agreement") that
provides for our $1,000.0 unsecured revolving credit facility (the "Revolving
Credit Facility") to extend the term of the Revolving Credit Facility from March
29, 2023 to March 29, 2024. We continue to have the ability to increase our
borrowing up to an additional $600.0, subject to lender commitments and certain
conditions as described in the Credit Agreement. Borrowings under the Credit
Agreement are available for general corporate purposes.

As of March 31, 2022, we had $174.4 in cash and cash equivalents, and
approximately $896.0 available through the Revolving Credit Facility and our
commercial paper program. To preserve our liquidity, we invest cash primarily in
government money market funds, prime money market funds, short-term commercial
paper and short-term bank deposits.

The current economic environment presents risks that could have adverse
consequences for our liquidity. See "Unfavorable economic conditions could
adversely affect demand for our products" under "Risk Factors" in Item 1A of our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the
"Form 10-K"). Although there is uncertainty related to the impact of the
COVID-19 pandemic, and other recent developments on our future results, we
believe our efficient business model, value focused portfolio and strong balance
sheet position us to manage our business through these challenges. We continue
to manage all aspects of our business including, but not limited to, monitoring
the financial health of our customers, suppliers and other third-party
relationships, implementing gross margin enhancement strategies and developing
new opportunities for growth. We do not anticipate that current economic
conditions will adversely affect our ability to comply with the financial
covenant in the Credit Agreement because we currently are, and anticipate that
we will continue to be, in compliance with the maximum leverage ratio
requirement under the Credit Agreement.

On October 28, 2021, the Board authorized a new share repurchase program, under
which we may repurchase up to $1,000.0 in shares of Common Stock (the "2021
Share Repurchase Program"). The 2021 Share Repurchase Program does not have an
expiration and replaced the 2017 Share Repurchase Program. All remaining dollars
authorized for repurchase under the 2017 Share Repurchase Plan have been
cancelled. The 2021 Share Repurchase Program did not modify our evergreen share
repurchase program, authorized by the Board on January 29, 2014, under which we
may repurchase, from time to time, Common Stock to reduce or eliminate dilution
associated with issuances of Common Stock under its incentive plans.

In December 2021, we executed open market purchases of 1.8 million shares for
$170.3 million, inclusive of fees, of which $100.0 million was purchased under
the evergreen share repurchase program and $70.3 million was purchased under the
2021 Share Repurchase Program. In December 2021, we also entered into an
accelerated share repurchase ("ASR") contract with a commercial bank to purchase
Common Stock. We paid $200.0 to the bank, inclusive of fees, and received an
initial delivery of shares equal to $180.0, or 1.8 million shares. We used cash
on hand and short-term borrowings to fund the initial purchase price. Upon the
completion of the ASR, which ended in February 2022, the bank delivered an
additional 0.2 million shares. The final shares delivered to us were determined
by the average price per share paid by the bank during the purchase period. All
2.0 million shares were purchased under the 2021 Share Repurchase Program.

Following our recent share buybacks, there remains $729.7 the availability of share buybacks under the 2021 Share Buyback Program at March 31, 2022.

On January 28, 2022, the Board declared a 4% increase in the regular quarterly
dividend from $0.2525 to $0.2625 per share, equivalent to an annual dividend of
$1.05 per share. The increase raises the annual dividend payout from $248.0 to
approximately $255.0.

We anticipate that our cash from operations, together with our current borrowing
capacity, will be sufficient to fund our share repurchase programs to the extent
implemented by management, pay debt and interest as it comes due and pay
dividends at the latest approved rate, and meet our capital expenditure program
costs, which are expected to be approximately $200.0 in 2022 primarily for
manufacturing capacity investments in laundry, litter and vitamins to support
expected future sales growth. Cash, together with our current borrowing
capacity, may be used for acquisitions that would complement our existing
product lines or geographic markets.


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Cash Flow Analysis

                                              Three Months Ended
                                          March 31,       March 31,
                                             2022           2021

Net cash flow generated by operating activities $152.8 $100.2
Net cash used in investing activities $(15.7) $(30.0)
Net cash used in financing activities $(202.6) $(125.0)




Net Cash Provided by Operating Activities - Our primary source of liquidity is
the cash flow provided by operating activities, which is dependent on net income
and changes in working capital. Our net cash provided by operating activities in
the first three months ended March 31, 2022 increased by $52.6 to $152.8 as
compared to $100.2 in the same period in 2021 due to a decrease in working
capital partially offset by lower cash earnings (net income adjusted for
non-cash items). The decrease in working capital is primarily related to the
change in accruals related to incentive compensation partially offset by higher
inventory levels to support service levels. We measure working capital
effectiveness based on our cash conversion cycle. The following table presents
our cash conversion cycle information for the quarters ended March 31, 2022 and
2021:

                                                             As of
                                              March 31, 2022       March 31, 2021       Change
Days of sales outstanding in accounts
receivable ("DSO")                                         28                   29            (1 )
Days of inventory outstanding ("DIO")                      69                   68             1
Days of accounts payable outstanding ("DPO")               80                   74            (6 )
Cash conversion cycle                                      17                   23            (6 )



Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is
calculated using a two-period average method, decreased 6 days from the prior
year due to payable term extensions. We continue to focus on reducing our
working capital requirements.

Net Cash Used in Investing Activities - Net cash used in investing activities
during the first three months of 2022 was $15.7, primarily reflecting $15.6 for
property, plant and equipment additions. Net cash used in investing activities
during the first three months of 2021 was $30.0, primarily reflecting $26.3 for
property, plant and equipment additions.

Net Cash Used in Financing Activities - Net cash used in financing activities
during the first three months of 2022 was $202.6 reflecting $149.9 of net debt
payments, $63.7 of cash dividend payments, partially offset by $11.0 of proceeds
from stock option exercises. Net cash used in financing activities during the
first three months of 2021 was $125.0, reflecting $69.0 of net debt payments and
$61.9 of cash dividend payments, partially offset by $5.9 of proceeds from stock
option exercises.

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