Church & Dwight (Church & Dwight (CHD)) kicked off its 2026 with a solid first quarter, beating Wall Street estimates on both the top and bottom lines. But the consumer products company's outlook for the current quarter left investors less than thrilled, sending shares down about 1.3% on Friday.
The company behind household names like ARM & HAMMER, OXICLEAN, and THERABREATH reported adjusted earnings of 95 cents per share, topping the consensus estimate of 93 cents. Revenue edged up 0.2% year over year to $1.469 billion, also ahead of the $1.456 billion analysts were looking for.
What really stood out was organic sales growth of 5%, well above the company's own forecast of 3%. That growth was broad-based, with volume up 5.3% across all three divisions. Domestic organic sales rose 5.4%, while international organic sales climbed 3.7%.
Margin Expansion and Profitability
Adjusted gross margin expanded 130 basis points to 46.4%, a nice improvement driven by higher volumes, productivity gains, and a favorable product mix. Those gains were partially offset by inflation and tariff costs — a theme that's becoming all too familiar for consumer goods companies.
Reported earnings per share came in at 91 cents, up from 89 cents a year earlier, while adjusted EPS increased 4.4% year over year. Operating income totaled $291 million, with adjusted operating income of $302.6 million, roughly flat compared with the prior year as higher marketing investments and acquisition-related costs offset top-line gains.
Segment Performance
Consumer domestic sales dipped 1.1% to $1.12 billion, but that was due to prior portfolio actions — the underlying organic growth remained strong, led by THERABREATH, ARM & HAMMER, and OXICLEAN. International sales rose 4.6% to $273.9 million, driven by THERABREATH, HERO, and BATISTE. Specialty products sales increased 3.1% to $77.7 million, supported by both volume and pricing gains.
Cash Flow and Balance Sheet
Cash from operations totaled $174.8 million during the quarter. Capital expenditures rose to $31.9 million from $16.5 million a year earlier. As of March 31, the company held $503.4 million in cash and reported total debt of $2.2 billion.
Outlook
Church & Dwight affirmed its full-year 2026 adjusted EPS guidance in the range of $3.71 to $3.81, roughly in line with the $3.75 analyst estimate. The company continues to expect net sales between $6.110 billion and $6.172 billion, compared with estimates of $6.161 billion. It also maintained its outlook for organic sales growth of 3% to 4% and a reported sales decline of 1.5% to 0.5%, reflecting the impact of prior portfolio actions.
CEO Rick Dierker acknowledged the macro headwinds but struck a confident tone. "While the situation in the Middle East remains fluid and is creating some incremental volume and inflationary pressure on commodities and transportation, we believe we can offset this transitory pressure and maintain our outlook for 2026," Dierker said.
That "transitory" language will sound familiar to anyone who followed inflation debates a few years back. But for now, the company is betting it can manage through the disruption.
The second quarter, however, looks a bit softer. Church & Dwight guided for adjusted EPS of about 88 cents and revenue of approximately $1.491 billion, both below analyst expectations of 97 cents and $1.509 billion, respectively. That's likely what weighed on the stock Friday.
At the time of publication, Church & Dwight shares were down 1.31% at $95.79.
