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Earnings Calls: 
Church & Dwight First Quarter Earnings Call
Author: 123jump.com Staff
123jump.com
Last Update: 5:06 AM EDT May 10 2008


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The ARM & HAMMER brand owner posted Q1 net sales of $552.9 million and organic net sales increased approximately 6% for the quarter, excluding a positive foreign exchange impact of about 1.5%. The net income for Q1 increased 23% from the past year quarter levels of $45.1 million to the current quarter level of $56.2 million. The management reported that about 5 cents to 6 cents of the year-over-year EPS boost is due to the timing of slotting and the diesel hedge gain.


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James R. Craigie: It is now the market leader on a brand basis alone.

Alice Longley (Buckingham Research Group): Are you gaining share in laundry?

James R. Craigie: Yes.

Alice Longley (Buckingham Research Group): How are OxiClean and SpinBrush doing?

James R. Craigie: They''re both doing fine. OxiClean had a very strong quarter in terms of consumption growth. That''s a category in private label you worry about. It''s an additive product, which people don''t necessarily have to use. They can use their laundry detergent; they don''t have to use the additive. SpinBrush also had a sales growth in the quarter. However, people could trade down to a manual toothbrush for less but we are launching a new product which will be the lowest priced SpinBrush ever introduced in the marketplace. Just like we have the Answer brand for pregnancy kit, we are going to have the lower price SpinBrush. We hope that not only will we keep driving our volumes but that we will get people who are buying manual toothbrushes that convert over to power toothbrushes and then from there trade up to even the better products in the category.

Jason Gere (Wachovia Capital Markets, LLC): Can you talk about where marketing spending is going? Are you looking into more non-traditional means like online or are you sticking more with cable and print?

James R. Craigie: We are making a little bit of shift but for smart reasons. We are making some shifts for brands like Trojan to go more online because it''s a more appropriate form to reach the younger target audience. Other than that, we are largely sticking to our traditional world. We spent about a quarter of our money in print and a fair amount of the rest in TV and radio and other vehicles.

Jason Gere (Wachovia Capital Markets, LLC): Can you comment on the two challenged businesses, deodorant and value toothpaste? How are you managing the brands in a softer economy?

James R. Craigie: Those businesses represent a little less than 10% of our total sales. About a year ago, we put a very aggressive team in place to manage those businesses and changed the whole approach going to market with them. We went from national advertising basis to much more of a retail focus working with the key retailers who control the majority of that business than working for lot of in-store promotions and in-store activity. It''s been very successful. Those brands were declining at a low double-digit rate and now we got that down into a mid single digit rate decline and we continue to work on that. It''s been a big improvement of reducing a drag in our company to actually have those brands declining at a much slower rate. We''ve seen some positive progress with couple of businesses like Aim. Pepsodent had positive sales growth in the first quarter. The team has therefore done a great job. However, the team took a totally different approach to managing those businesses with the marketing spending they had. At the same time, we shifted some of the advertising support over to our core businesses, our larger brands and it has driven even stronger growth on those brands. The combination has been a big factor in the solid organic revenue growth we''ve had as a company and we continue to expect that going forward.

William Schmitz (Deutsche Bank): The Other expense line was looking down year-over-year. What was the reason?

Matthew T. Farrell: We had FX of $2million, including interest. The interest expense is way down year-over-year. The rates and debt were both lower.
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