CHURCH & DWIGHT CO., INC.
annual
report
2022
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in millions, except per share data
2022
2021
reported
adjusted*
reported
adjusted*
Net Sales
Gross Profit Margin
Income from Operations
Operating Profit Margin
Net Income
Net Income Per Share – Diluted
Dividends Per Share
Year-end Stock Price
$ 5,376
$ 5,376
$ 5,190
$ 5,190
41.9 %
41.9 %
43.6 %
43.6 %
$ 598
$ 1,015
$ 1,079
$
981
11.1 %
18.9 %
$ 414
$ 1.68
$ 1.05
$ 80.61
$ 731
$ 2.97
$ 1.05
$ 80.61
20.8 %
828
3.32
1.01
$
$
$
$ 102.50
18.9 %
$
754
$ 3.02
$ 1.01
$ 102.50
On February 3, 2023, the Company declared a 4.0% increase in its
quarterly dividend from $0.2625 per share to $0.2725 per share.
2022 Key Financial Results
– Worldwide net sales increased 3.6%.
– Organic sales increased 1.4%.
– Gross profit margin decreased 170 basis points to 41.9%.
– Adjusted operating profit margin was unchanged at 18.9%.
– Net cash from operations was $885 million.
– Adjusted earnings per shared decreased 1.7%.
NET SALES
(in millions of dollars)
2020
2021
2022
$4,896
$5,190
$5,376
ADJUSTED EARNINGS PER SHARE (1)
(in dollars)
2020
2021
2022
$2.83 (2)
$3.02 (3)
$2.97 (4)
For additional information, see Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2022.
* This annual report includes non-GAAP financial measures, including adjusted income from operations, adjusted operating profit margin, adjusted net income, adjusted EPS, organic
sales, and free cash flow, which differ from reported results using Generally Accepted Accounting Principles (GAAP).
(1) This annual report presents adjusted EPS, namely, earnings per share calculated in accordance with GAAP, as adjusted to exclude significant one-time items that are not indicative
of the Company’s period to period performance. We believe that this metric provides investors a useful perspective of underlying business trends and results and provides useful
supplemental information regarding our year over year earnings per share growth.
(2) Adjusted 2020 EPS excludes a $0.28 positive FLAWLESS acquisition related earn out adjustment and a $0.01 gain on the sale of an international brand.
(3) Adjusted 2021 EPS excludes $0.30 per share positive impact from the FLAWLESS acquisition earn-out estimate.
(4) Adjusted 2022 EPS excludes $1.26 impact of the FLAWLESS intangible asset impairment and $0.03 impact of charges related to restricted stock that was issued for the Hero
acquisition, wh ich will be treated as compensation expense.
Corporate Information
Church & Dwight Co., Inc., founded in 1846, is the leading
XTRA, VMS (L’IL CRITTERS and VITAFUSION), BATISTE,
U.S. producer of sodium bicarbonate, popularly known
WATERPIK, ZICAM, THERABREATH and HERO. About
as baking soda, a natural product that cleans, deodorizes,
45% of the Company’s domestic consumer products are
leavens and buffers. The Company’s ARM & HAMMER
sold under the ARM & HAMMER brand name and derivative
brand is one of the nation’s most trusted trademarks
trademarks, such as ARM & HAMMER liquid and powder
for a broad range of consumer and specialty products
laundry detergent, ARM & HAMMER cat litter, ARM &
developed from the base of sodium bicarbonate and
HAMMER dental care and ARM & HAMMER baking soda.
related technologies.
The remaining 13 power brands have been added to the
Company’s portfolio since 2001 through a series of
Church & Dwight’s consumer products business is
organized into two segments: Consumer Domestic, which
acquisitions.
encompasses both household and personal care products,
The combination of the core ARM & HAMMER brands and
and Consumer International, which primarily consists of
the other 13 power brands make Church & Dwight one of
personal care products. The Company has fourteen key
the leading consumer packaged goods companies in the
brands representing approximately 85% of its revenues.
United States. Church & Dwight’s third business segment
These “power brands” include ARM & HAMMER, TROJAN,
is Specialty Products. This business is a leader in specialty
OXICLEAN, SPINBRUSH, FIRST RESPONSE, NAIR, ORAJEL,
inorganic chemicals, animal nutrition, and specialty cleaners.
Growth Driven by 14 Power Brands
ARM & HAMMER
More aisles in the grocery store than any other brand;
A&H products are in 86% of U.S. households
XTRA
#1 Extreme Value
Laundry Detergent
L’IL CRITTERS &
VITAFUSION
#1 Gummy Brands for
Adults and #1 Gummy
Brand for Kids in the U.S.
OXICLEAN
#1 Laundry
Additive Brand
SPINBRUSH
#2 Battery Powered
Toothbrush Brand
FIRST RESPONSE
#2 Branded Pregnancy
Kit in the U.S.
WATERPIK
#1 Power Flosser
and #1 Replacement
Showerhead in the U.S.
ORAJEL
#1 Oral Care Pain
Relief Brand
BATISTE
#1 Dry Shampoo
in the U.S.
NAIR
#1 Depilatory Brand
in the U.S.
TROJAN
#1 Condom Brand
in the U.S.
ZICAM
#1 Adult Cold
Shortening in the U.S.
THERABREATH
#2 Alcohol-Free
Mouthwash in the U.S.
HERO
#2 Acne Treatments
Based on Information Resources, Inc. — (IRI) Total US – MULO for the period ending 12/25/22.
| 1 |
Matthew T. Farrell
Richard A. Dierker
Patrick D. de Maynadier, Esq.
Chairman, President
and Chief Executive Officer
Executive Vice President,
and Head of Business
Operations
Executive Vice President,
General Counsel and Secretary
Dear Fellow Stockholder,
2022 was another volatile year dominated by significant
inflation which resulted in unplanned material, labor and
transportation costs that put significant pressure on gross
margins. Prior to 2022, we had already raised prices on
80% of our portfolio to offset the inflationary pressures
of the pandemic. In 2022, a second round of pricing was
taken in several categories including laundry and cat litter.
Our organic sales growth was 1.4% reflecting consumer
pullback on discretionary purchases of WATERPIK flossers
and FLAWLESS hair removal devices as consumers were
squeezed by inflation. In late 2022, we wrote off our
investment in FLAWLESS, a device business acquired in
2019. In the future, we will stick to acquiring fast-moving
consumables. There was also a pullback in VITAFUSION
gummy vitamins as many consumers exited the category
post COVID, which had artificially inflated demand.
WATERPIK, FLAWLESS, and VITAFUSION, which account
for approximately 20% of our global sales, were a significant
drag on our organic revenue growth. The good news is the
remaining 80% of our business grew approximately 4%
in 2022. ARM & HAMMER liquid laundry detergent and
ARM & HAMMER litter achieved all time high market shares.
THERABREATH, ZICAM, and HERO experienced double-digit
consumption growth and market share gains. We believe we
are set up for success in 2023.
Here are the 2022 results:
— Reported net sales were $5,376 million, a 3.6% increase.
— Organic sales increased 1.4% driven by 0.9% growth in
our Consumer Domestic business, 2.8% growth in our
Consumer International business, and a 3.7% increase in
our Specialty Products business.
— Gross margin decreased 170 basis points to 41.9%,
primarily due to higher manufacturing costs. These
higher costs were partially offset by our productivity
improvements and higher pricing.
— Adjusted EPS was $2.97 per share, a 2% decrease.
— We generated $885 million of cash from operating
activities and invested $179 million in capital expenditures
resulting in free cash flow of $706 million.
— Total Shareholder Return (TSR) represents the combination
of stock price appreciation and dividends. We manage
Church & Dwight with the perennial goal of delivering
strong TSR to you, our stockholders. Over the past decade,
we delivered an annual TSR of approximately 13.3%, which
was better than the 10.4% TSR of the S&P 500 stock index
during the same period. In the 15 years prior to 2022,
we delivered positive TSR each year, often double-digit
returns. In 2022, we went backwards and posted negative
20% TSR. This is a disappointment to management, our
employees, and our shareholders. Our goal is to start
another 15-year positive TSR streak in 2023.
Evergreen Model
Our long-term mission is to maintain our track record
of delivering outstanding TSR. Our long-term plan for
delivering superior returns is based on what we call our
“Evergreen business model” — 3% annual organic revenue
growth and 8% annual increase in earnings per share. The
3% annual organic growth is driven by U.S. 2%, International
6% and Specialty Products 5%. The 8% earnings per share
growth is primarily driven by 3% organic growth and 50
| 2 | C H U R C H & D W I G H T C O . , I N C . — A N N U A L R E P O R T 202 2
basis points of operating margin improvement. Our operating
margin improvement is dependent on 25 basis points of
gross margin expansion and a 25-basis points reduction
of overhead costs. Achievement of the Evergreen model
influences both our short-term and long-term decision
making and promotes financial literacy inside our Company.
It is an important part of our success. The mid-point of our
2023 Outlook calls for 3% organic revenue growth and
2% EPS growth. 2023 EPS is burdened by a deliberate
incremental investment in marketing, normalized incentive
compensation, and higher interest expense. We expect to
return to our evergreen algorithm in 2024 and beyond.
Key Drivers of TSR
The following are the key drivers of our success:
(1) A Diversified Product Portfolio
Church & Dwight’s diverse consumer product portfolio,
consisting of both premium (60%) and value (40%) brands,
enables us to succeed in various economic environments.
We believe no other consumer packaged goods (CPG)
company has such a well-balanced portfolio of both
premium and value brands.
(2) Focus on Power Brands
While we sell over 80 brands, 14 of these brands generate
over 85% of our revenues and profits. These 14 brands,
which we call our “power brands,” are ARM & HAMMER,
TROJAN, OXICLEAN, VMS (L’IL CRITTERS and VITAFUSION),
XTRA, FIRST RESPONSE, SPINBRUSH, ORAJEL, NAIR,
BATISTE, WATERPIK, ZICAM, THERABREATH and HERO.
Our 14 Power Brands are “Brands Consumers Love” and,
consequently, are market leaders in most categories. We
connect with consumers through execution of creative
marketing campaigns, innovative new products, and sustained
marketing spending resulting in high market shares for
our brands.
(3) High International Growth
Our Evergreen model calls for our Consumer International
business to grow revenues 6% annually. Today, 17% of
our sales are outside the U.S. We have fully operational
subsidiaries in six countries (U.K., France, Germany, Canada,
Mexico, and Australia) and export our products to over 130
countries through our Global Markets Group (“GMG”). In
2022, our international business posted organic growth of
2.8%, which is below our Evergreen model, largely driven
by the GMG results. In 2022, our international subsidiaries
together grew 4% and accounted for 65% of our international
business. GMG continues to be the largest international
business, representing 35% of our international revenues.
GMG did not grow in 2022 due to widespread supply chain
constraints, lockdowns in China, and a cessation of sales into
Russia and Ukraine due to the war. In the 5 years prior to
2022, GMG grew sales at an average annual rate of 15%.
We expect GMG to return to a high growth rate in 2023.
International is a destination for continued investment. In
2022, we opened an office in Mumbai to better serve markets
in IME (India Middle East), installed an ERP system in China to
facilitate direct selling, and expanded local manufacturing in
APAC for certain of our products. In 2023, we will be making
a significant investment in our back-office infrastructure,
especially regulatory and new product development, to
support the long-term growth we expect from GMG.
(4) Animal Nutrition Growth Opportunity
We expect our Specialty Products division (“SPD”) to grow
revenues 5% annually. In 2022, SPD grew organic revenues
3.7%. Our long-term growth expectation is driven by our
animal and food production business which represents about
70% of SPD sales (with the remainder largely bulk sodium
bicarbonate). The global population is expected to rise from
7.7 billion today to 9.7 billion in 2050. The demand for
protein will increase with population growth. At the same
time, there is a trend away from the use of antibiotics,
hormones, and chemicals in animal nutrition. Our portfolio
of natural supplements, prebiotics, and custom probiotics for
dairy cows, poultry, cattle, and swine are well-positioned for
this global growth. Considering the population tailwind and
the strength of our products, we have strong confidence in
long-term growth.
(5) Winning Online
Our long-term success requires us to be “digitally savvy.” We
are preparing ourselves for a world where 40% of our net
sales are ordered online. In 2015, only 1% of our sales were
online. In 2022, approximately 16% of our global sales were
online. That percentage is closer to 18% if we include last
milers (e.g., Instacart) and Click and Collect (i.e., order online,
pick up in store). The online channel is the fastest growing
class of trade in our company. We are moving quickly to build
on our digital expertise. In 2022, we created a new position,
Global Chief Digital Growth Officer that leads the charge
| 3 |
on our digital acceleration. We reevaluated our agency and
vendor partnerships and switched a significant amount of
work to leading edge firms. We instituted a Digital IQ
certification program to upskill our employees. To analyze
consumer and retailer data, we combined the teams that
had previously operated independently to identify consumer
insights. Our progress is an illustration of the digital skills we
have developed and the adaptability of our Company to be
ready for the future.
(6) Focus on Gross Margin
Gross margin expansion fuels our organic growth because it
enables us to increase investments in marketing, R&D, and
technology. In 2022, our gross margin decreased 170 basis
points to 41.9%, primarily due to higher commodities, higher
transportation costs, labor increases, and investments. These
were partially offset by our productivity improvements and
the impact of higher pricing. We expect to turn this around in
2023 as our pricing and productivity efforts exceed inflationary
pressures for the first time in many years, and we expect a
tailwind from our recent margin-accretive acquisition.
(7) Growth through Acquisitions
Church & Dwight has a long history of successfully acquiring
businesses. Over the past 20 years, we acquired 13 of
our 14 current Power Brands. To illustrate our long-term
acquisition mindset, we like to say, “14 Power Brands today,
20 tomorrow.” We possess a competency in targeting,
acquiring, and integrating brands and businesses. In a world
where seven out of 10 acquisitions do not create value, we
have a superior track record in making accretive acquisitions.
We are disciplined in adhering to clear acquisition guidelines
which we have sharpened to target fast-moving consumables.
We quickly integrate acquisitions to leverage our existing
capital base in manufacturing, logistics and purchasing
and other back-office functions. In December 2021, the
Company acquired the THERABREATH brand which is the
fastest growing mouthwash in the U.S. Over the past year,
it has become the #2 branded non-alcohol mouthwash
and the #3 brand in the total mouthwash category. In
October 2022, the Company acquired the HERO brand
for approximately $630 million. HERO is the #1 brand in
the acne patch category in the United States and the
fastest growing brand in the acne treatment category.
THERABREATH and HERO are expected to drive both
U.S. and International growth in the coming years.
(8) “BEST IN CLASS” Free Cash Flow Conversion
In 2022, our annual free cash flow (Cash from Operations
minus CapEx) was $706 million. In 2022, we converted
97% of our adjusted net income into free cash flow (free
cash flow conversion). This is an excellent result considering
our significant CapEx investment in 2022. Over the past 10
years, our free cash flow conversion has led the CPG industry,
averaging 119%. Over the next three years, we anticipate
that we will generate over $2.4 billion in free cash flow. We
expect our financial strength to enable us to aggressively
pursue acquisitions, make capital investments to continue
to support the profitable growth of our existing businesses,
and return cash to our stockholders. We increased our annual
dividend by 4% in the first quarter of 2023. Over the last five
years, we have averaged a 4% dividend growth rate, ahead of
the peer average. We have paid a quarterly dividend for 122
consecutive years.
(9) Superior Overhead Management
Maintaining tight controls on our selling, general and
administrative expense (“SG&A”) has been a hallmark of
Church & Dwight. Our adjusted SG&A is 13.0% of sales and
10.2% excluding amortization. This overhead rate is one of
the lowest in the CPG space. We believe we have the highest
revenue per employee of any major CPG company (over $1
million per employee), a measure of productivity that is often
overlooked. Church & Dwighters are committed to finding
ways to grow our revenues, lower our costs and provide
outstanding service to our customers. Because we are lean,
we are a nimble organization enabling us to communicate
easily, make quick decisions, and adapt to change.
(10) Simple Incentive Compensation
At Church & Dwight, we embrace the power of simplicity.
This is evident in our simple incentive compensation plan.
In 2022, our bonuses were tied directly to four equally
weighted drivers of TSR: net sales growth, gross margin
expansion, EPS growth, and operating cash flow. In 2023,
we are adding a fifth component, ‘Strategic Initiatives’
that are central to our long-term success: Digital Acceleration,
International Expansion, Sustainability, Diversity & Inclusion,
and Acquisition Integration. The five components of our 2023
annual incentive compensation will be equally weighted. In
past years, our equity compensation has been 100% stock
options. In 2023, we are making a change. Our equity
compensation will consist predominantly of stock options
| 4 | C H U R C H & D W I G H T C O . , I N C . — A N N U A L R E P O R T 202 2
(75%) that are valuable only when the value of your
investment rises. The remaining 25% of our equity
compensation will be comprised of two other vehicles:
performance units (15%) tied to total shareholder return
compared to our peer group and time-based restricted
stock units (10%). Our senior management team is
required to maintain a significant investment in our
stock to be closely aligned with you, our stockholders.
Sustainability
Sustainable business practices are especially important to our
Company, our employees, our retailers, and our consumers.
Church & Dwight has been a friend of the environment since
the early 20th century. In 1907, we began using recycled
paperboard in our packaging. In the 1970’s, Church & Dwight
was the only corporate sponsor of the first Earth Day and the
first to remove phosphates from laundry detergent. We have
planted millions of trees in the Mississippi Valley through our
partnership with the Arbor Day Foundation. Today, 100% of
our global electricity is derived from renewable resources.
We are committed to doing our part for the environment and
are committed to the Science-Based Targets Initiative (SBTi).
SBTi is focused on reducing Greenhouse Gas Emissions to
help keep global climate change safely below the 2-degree
threshold, aligned with the Paris Agreement goals. Our
continued improvement with regards to Sustainability
and Environmental, Social, and Governance (ESG) is being
recognized by the outside world as well. Our MSCI rating,
a 3rd party measurement of a company’s management
of financially relevant ESG risks and opportunities, has
improved over the last three years, climbing to a AA rating.
Culture
Our “secret sauce” is the Church & Dwight culture. We
describe ourselves as roll-up-your-sleeves company with a
high aptitude and an underdog mentality. Church & Dwighters
exhibit an absence of ego and ‘wear many hats’ because our
responsibilities often extend beyond our job descriptions. We
make decisions based on “What is best for Church & Dwight”,
putting personal goals second.
that lead to new products and brands that consumers love.
Our employees’ willingness to pitch in and help one another
makes teamwork a hallmark of Church & Dwight’s culture.
Church & Dwighters have experience, good instincts, and
a zeal to “get the facts” to make data driven decisions. Our
employees are the backbone of our great Company. At
Church & Dwight, we strive to create a culture of belonging.
We strive for our workplace to be a place where people
matter and to reflect the diverse consumer base that we
serve. Through our Diversity & Inclusion Advisory Council,
our Company has made clear our support for racial equality
and the importance of diversity both inside and outside
our walls. The Church & Dwight Philanthropic Foundation
(the “Foundation”) focuses on helping to create equitable
and inclusive opportunities and advancing environmental
preservation, two causes that are important to our Company.
At Church & Dwight, we are focused on creating an inclusive,
stronger, more resilient company while contributing to a
better, more sustainable world.
2023 Outlook
We expect reported sales growth to be 5-7% and organic
sales growth to be 2-4%. We expect gross margin expansion
of 100 to 120 basis points, and an incremental increase in
marketing dollars with a target of 10.5% of revenues. We
expect cash from operations to be approximately $925
million. We continue to invest in the future. With regards
to capital expenditures, in 2022 we began a capacity
expansion for laundry, litter, and vitamins. We expect our
CapEx spending to peak at $250 million in 2023 and $180
million in 2024. In 2025 we plan to return to historical
levels of 2% of revenues.
I would like to thank all employees of Church & Dwight for
the personal sacrifices that they made to deliver our business
results in 2022.
We emphasize speed in doing our work because speed of
execution determines the winners and the losers in the
consumer products industry. By obsessively focusing on
the consumer experience, our employees discover insights
Matthew T. Farrell
Chairman, President
and Chief Executive Officer
| 5 |
NON-GAAP MEASURES:
ADJUSTED OPERATING INCOME AND MARGIN:
The following discussion addresses the non-GAAP measures
This annual report provides information regarding adjusted
used in this annual report and reconciliations of these
operating income and margin, excluding items relating to
non-GAAP measures to the most directly comparable GAAP
the earnout adjustment from the FLAWLESS acquisition in
measures. These non-GAAP financial measures should not
2021. 2022 excludes a FLAWLESS impairment charge and
be considered in isolation from or as a substitute for the
a charge related to restricted stock issued in the HERO
comparable GAAP measures. The following non-GAAP
acquisition. We believe that excluding these items from
measures may not be the same as similar measures provided
operating income and margin provides a useful measure
by other companies due to differences in methods of
of the Company’s ongoing operating performance and a
calculation and items and events being excluded.
more effective comparison to prior periods by excluding
ORGANIC SALES GROWTH:
significant one-time events.
This annual report provides information regarding organic
ADJUSTED EPS:
sales growth, namely net sales growth excluding the effect of
This annual report also presents adjusted earnings per
acquisitions, divestitures and foreign exchange rate changes.
share (EPS) calculated in accordance with GAAP, as adjusted
Management believes that the presentation of organic sales
to exclude significant one-time items that are not indicative
growth is useful to investors because it enables them to
of the Company’s period-to-period performance. We
assess, on a consistent basis, sales trends related to products
believe that this metric provides investors a useful
that were marketed by the Company during the entirety
perspective of underlying business trends and results and
of relevant periods, excluding the impact of acquisitions,
provides useful supplemental information regarding our
divestitures and excluding foreign exchange rate changes that
year-over-year earnings per share growth. Adjusted 2021
are out of the control of, and do not reflect the performance
EPS excludes items relating to the earn-out adjustment from
of, the Company and management.
the FLAWLESS acquisition. 2022 excludes a FLAWLESS
ADJUSTED SG&A:
impairment charge and a charge related to restricted stock
issued in the HERO acquisition.
This annual report presents information regarding adjusted
selling, general and administrative (SG&A) expenses excluding
FREE CASH FLOW:
items relating to the earnout adjustment from the FLAWLESS
Free cash flow is defined as cash from operating activities
acquisition in 2021. 2022 excludes a FLAWLESS impairment
less capital expenditures. Management views free cash
charge and a charge related to restricted stock issued in the
flow as an important measure because it is one factor in
HERO acquisition. We believe that this metric enhances
determining the amount of cash available for dividends
investors’ understanding of the Company’s year-over-year
and discretionary investment.
expenses by excluding certain significant one-time items.
FREE CASH FLOW AS PERCENTAGE OF
ADJUSTED NET INCOME:
Free cash flow as percentage of adjusted net income is
defined as the ratio of free cash flow to adjusted net income.
Management views this as a measure of how effective the
Company manages its cash flow relating to working capital
and capital expenditures.
| 6 | C H U R C H & D W I G H T C O . , I N C . — A N N U A L R E P O R T 202 2
2022 ORGANIC SALES RECONCILIATION
Reported Sales Growth
Less:
Acquisitions
Add:
FX / OTHER
Divestitures
Organic Sales Growth
TWELVE MONTHS ENDED 12/31/2022
Total
Company
Worldwide
Consumer
Consumer
Domestic
Consumer
International
Specialty
Products
3.6 %
3.6 %
4.8 %
-1.8 %
3.7 %
3.2 %
3.3 %
3.9 %
0.9 %
0.0 %
1.0 %
0.0 %
1.4 %
1.0 %
0.0 %
1.3 %
0.0 %
0.0 %
0.9 %
5.5 %
0.0 %
2.8 %
0.0 %
0.0 %
3.7 %
2022 FREE CASH FLOW AS A PERCENTAGE OF ADJUSTED NET INCOME
(Dollars in Millions)
Cash from Operations
Capital Expenditures
Free Cash Flow
Adjusted Net Income
Percentage
$ 885.2
$ (178.8 )
$ 706.4
$ 730.6
97 %
ADJUSTED DILUTED EARNINGS PER SHARE RECONCILIATION
Diluted Earnings Per Share – Reported
Flawless Impairment
Hero Restricted Stock
Flawless Earn-Out Adjustment
Diluted Earnings Per Share –
Adjusted (non-GAAP)
2022
2021 % CHANGE
$ 1.68
$ 1.26
$ 0.03
$
—
$ 3.32
$ —
$ —
$ (0.30 )
-49.4 %
—
—
—
$ 2.97
$ 3.02
-1.7 %
| 7 |
OFFICERS AND
SIGNIFICANT
EMPLOYEES
Barry A. Bruno
Executive Vice President,
Chief Marketing Officer and
President – Consumer Domestic
Brian Buchert
Executive Vice President,
Strategy, M&A, and Business
Partnerships
Patrick D. de Maynadier, Esq.
Executive Vice President,
General Counsel and Secretary
Richard A. Dierker
Executive Vice President,
Chief Financial Officer and
Head of Business Operations
Matthew T. Farrell
Chairman, President and
Chief Executive Officer
Kevin Gokey
Senior Vice President,
Global Chief Information Officer
Rene M. Hemsey
Executive Vice President,
Chief Human Resources Officer
Carlos G. Linares
Executive Vice President,
Chief Technology Officer and
Global New Products Innovation
Surabhi Pokhriyal
Senior Vice President,
Global Chief Digital Growth Officer
Michael G. Read
Executive Vice President
International
Rick Spann
Executive Vice President,
Chief Supply Chain Officer
Paul R. Wood
Executive Vice President,
Chief Commercial Officer
DIRECTORS
Bradlen S. Cashaw
Chief Operating Officer
Agropur
Director since 2021
James R. Craigie
Former Chairman, President and
Chief Executive Officer
Church & Dwight Co., Inc.
Director since 2004
Matthew T. Farrell
Chairman, President and
Chief Executive Officer
Church & Dwight Co., Inc.
Director since 2016
Bradley C. Irwin
Lead Director Retired President
and Chief Executive Officer
Welch Foods Inc.
Director since 2006
Penry W. Price
Vice President
Marketing Solutions
LinkedIn Corporation
Director since 2011
Susan G. Saideman
Founder and Chief Executive
Officer, Portage Bay Limited LLC
and former Vice President,
Amazon, Inc.
Director since 2020
| 8 | C H U R C H & D W I G H T C O . , I N C . — A N N U A L R E P O R T 202 2
Ravichandra K. Saligram
Chief Executive Officer
Newell Brands
Director since 2006
Robert K. Shearer
Retired Senior Vice President
and Chief Financial Officer
VF Corporation
Director since 2008
Janet S. Vergis
Former Executive Advisor
Private Equity and Former CEO
OraPharma, Inc.
Director since 2014
Art Winkleblack
Retired Executive Vice President
and Chief Financial Officer
H.J. Heinz Company
Director since 2008
Laurie J. Yoler
General Partner
Playground Global
Director since 2018
EMERITUS
DIRECTOR
Dwight C. Minton
Chairman Emeritus
Church & Dwight Co., Inc.
PRINCIPAL
ACCOUNTING
OFFICER
Joseph J. Longo
Vice President, Controller and
Chief Accounting Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
For the fiscal year ended December 31, 2022
OR
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 1-10585
CHURCH & DWIGHT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
13-4996950
(I.R.S. Employer
Identification No.)
500 Charles Ewing Boulevard, Ewing, NJ 08628
(Address of principal executive offices)
Registrant’s telephone number, including area code: (609) 806-1200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $1 par value
Trading
Symbol(s)
CHD
Name of each exchange
on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ Emerging growth company ‘
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. È
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ‘
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2022 (the last business day of the
registrant’s most recently completed second fiscal quarter) was approximately $21.8 billion. For purposes of making this calculation only, the registrant
excluded the shares of common stock (the “Common Stock”) of Church & Dwight Co., Inc. (the “Company”) held by directors, executive officers and
beneficial owners of more than ten percent of the common stock. The aggregate market value is based on the closing price of such stock on the New York
Stock Exchange on June 30, 2022.
As of February 13, 2023, there were 244,040,705 shares of Common Stock outstanding.
Documents Incorporated by Reference
Certain provisions of the registrant’s definitive proxy statement to be filed not later than April 30, 2022 are incorporated by reference in Items 10
through 14 of Part III of this Annual Report on Form 10-K (this “Annual Report”).
CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION
This Annual Report contains forward-looking statements, including, among others, statements relating to net sales
and earnings growth; the impact of the COVID-19 pandemic and the Company’s response; gross margin changes; trade
and marketing spending; marketing expense as a percentage of net sales; sufficiency of cash flows from operations;
earnings per share; the impact of new accounting pronouncements; cost savings programs; recessionary conditions;
interest rates; inflation; consumer demand and spending; the effects of competition; the effect of product mix; volume
growth, including the effects of new product launches into new and existing categories; the decline of condom usage;
the Company’s hedge programs; the impact of foreign exchange, and commodity price fluctuations; impairments and
other charges; the Company’s investments in joint ventures; the impact of acquisitions and divestitures; capital
expenditures; the Company’s effective tax rate; the impact of tax audits; tax changes; the effect of the credit
environment on the Company’s liquidity and capital resources; the Company’s fixed rate debt; compliance with
covenants under the Company’s debt instruments; the Company’s commercial paper program; the Company’s current
and anticipated future borrowing capacity to meet capital expenditure program costs; the Company’s share repurchase
programs; payment of dividends; environmental and regulatory matters; the availability and adequacy of raw materials,
including trona reserves and the conversion of such reserves; and the customers and consumer acceptance of certain
ingredients in our products. Other forward-looking statements in this report are generally identified by the use of such
terms as “may,” “could,” “expect,” “intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” “anticipate,” “to be,”
“to make” or other comparable terms. These statements represent the intentions, plans, expectations and beliefs of the
Company, and are based on assumptions that the Company believes are reasonable but may prove to be incorrect. In
addition, these statements are subject to risks, uncertainties and other factors, many of which are outside the
Company’s control and could cause actual results to differ materially from such forward-looking statements. Factors
that could cause such differences include a decline in market growth, retailer distribution and consumer demand (as a
result of, among other things, political, economic and marketplace conditions and events), including those relating to
the outbreak of contagious diseases; other impacts of the COVID-19 pandemic and its impact on the Company’s
operations, customers, suppliers, employees, and other constituents, and market volatility and impact on the economy
(including contributions to recessionary conditions), resulting from global, nationwide or local or regional outbreaks or
increases in infections, new variants, and the risk that the Company will not be able to successfully execute its response
plans with respect to the pandemic or localized outbreaks and the corresponding uncertainty; the impact of regulatory
changes or policies associated with the COVID-19 pandemic, including continuing or renewed shutdowns of retail and
other businesses in various jurisdictions; the impact of new legislation such as the U.S. CARES Act, the EU Medical
Device Regulation, new cosmetic and device regulations in Mexico, and the U.S. Modernization of Cosmetic
Regulation Act; the impact on the global economy of the Russia/Ukraine war, including the impact of export controls
and other economic sanctions; potential recessionary conditions or economic uncertainty; the impact of continued shifts
in consumer behavior, including accelerating shifts to on-line shopping; unanticipated increases in raw material and
energy prices, including as a result of the Russia/Ukraine war; delays and increased costs in manufacturing and
distribution; increases in transportation costs; labor shortages; the impact of price increases for our products; the impact
of inflationary conditions; the impact of supply chain and labor disruptions; the impact of severe weather on raw
material and transportation costs; adverse developments affecting the financial condition of major customers and
suppliers; competition; changes in marketing and promotional spending; growth or declines in various product
categories and the impact of customer actions in response to changes in consumer demand and the economy, including
increasing shelf space or on-line share of private label and retailer-branded products or other changes in the retail
environment; consumer and competitor reaction to, and customer acceptance of, new product introductions and
features; the Company’s ability to maintain product quality and characteristics at a level acceptable to our customers
and consumers; disruptions in the banking system and financial markets; the Company’s borrowing capacity and ability
to finance its operations and potential acquisitions; higher interest rates; foreign currency exchange rate fluctuations;
implications of the United Kingdom’s withdrawal from the European Union; transition to, and shifting economic
policies in the United States; potential changes in export/import and trade laws, regulations and policies of the United
States and other countries, including any increased trade restrictions; increased or changing regulation regarding the
Company’s products and its suppliers in the United States and other countries where it or its suppliers operate; market
volatility; issues relating to the Company’s information technology and controls; the impact of natural disasters,
including those related to climate change, on the Company and its customers and suppliers, including third party
information technology service providers; integrations of acquisitions or divestiture of assets; the outcome of
contingencies, including litigation, pending regulatory proceedings and environmental matters; and changes in the
regulatory environment in the countries where we do business.
For a description of additional factors that could cause actual results to differ materially from the forward-looking
statements, please see Item 1A, “Risk Factors” in this Annual Report.
The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by the United States federal securities laws. You are
advised, however, to consult any further disclosures the Company makes on related subjects in its filings with the
United States Securities and Exchange Commission (the “Commission”).
Unless otherwise specified or the context otherwise requires, all references in this Annual Report on Form 10-K to
“Church & Dwight,” “we,” “us,” “our” and “Company” refer to Church & Dwight Co., Inc. and its consolidated
subsidiaries.
TABLE OF CONTENTS
PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . .
Item
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . . .
PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Page
1
14
33
33
33
33
34
36
37
53
54
97
97
97
97
98
98
98
98
98
15.
Exhibits, Financial Statement Schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
ITEM 1. BUSINESS
OVERVIEW OF BUSINESS
We were founded in 1846 and incorporated in Delaware in 1925. We develop, manufacture and market a
broad range of consumer household and personal care products and specialty products focused on animal and
food production, chemicals and cleaners. Our consumer products marketing efforts are focused principally on our
14 “power brands.” These well-recognized brand names include ARM & HAMMER® baking soda, cat litter,
laundry detergent, carpet deodorizer and other baking soda based products; TROJAN® condoms, lubricants and
vibrators; OXICLEAN® stain removers, cleaning solutions, laundry detergents and bleach alternatives;
SPINBRUSH® battery-operated toothbrushes; FIRST RESPONSE® home pregnancy and ovulation test kits;
NAIR® depilatories; ORAJEL® oral analgesic; XTRA® laundry detergent; L’IL CRITTERS® and
VITAFUSION® gummy dietary supplements for children and adults, respectively; BATISTE® dry shampoo;
WATERPIK® water flossers and showerheads; ZICAM® cold shortening and relief products; THERABREATH®
oral care products; and HERO® acne treatment products. We reevaluate the composition of our “power brands”
from time to time, and in 2022 removed FINISHING TOUCH FLAWLESS® products from our list of power
brands and added HERO® acne treatment products.
We sell our consumer products under a variety of brands through a broad distribution platform that includes
supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar and
other discount stores, pet and other specialty stores and websites and other e-commerce channels, all of which
sell our products to consumers. We sell our specialty products to industrial customers, livestock producers and
through distributors.
Our Sustainability Strategy and Environmental, Social and Governance (“ESG”) Pillars
Sustainability is how we refer to our Environmental, Social & Governance (“ESG”) efforts as part of our
overall success into delivering growth and profitability while making a meaningful and positive impact. We
believe that sustainable operations are both financially and operationally beneficial to our business, and critical to
the health of the communities in which we operate, while contributing to a better world. Each year we publish a
Sustainability Report that discloses our business and corporate responsibility commitments and details our ESG
performance metrics and targets and other components of our ESG efforts. Our 2021 Sustainability Report is
available on our web site at https://churchdwight.com/pdf/Sustainability/2021-Sustainability-Report.pdf, and our
2022 Sustainability Report will be available in April 2023 (the “2022 Sustainability Report” and together with
the 2021 Sustainability Report, the “Sustainability Reports”). References to our Sustainability Reports are for
informational purposes only and neither the Sustainability Reports nor the other information on our website is
incorporated by reference into this Annual Report on Form 10-K.
Our global sustainability strategy is derived from our heritage and organizational values. The following six
pillars are the core focus of our Environmental and Social efforts. Each is supported through our Governance
practices which are intended to maintain a system of rules and practices that determine how we operate and align
the interests of our stakeholders in support of ethical business practices and financial success.
• Our Brands: Delight consumers with our brands and contribute towards a more sustainable world
• Products: Provide safe and effective products for consumers and the environment
• Packaging: Utilize consumer friendly and environmentally responsible packaging
• Employees and Communities: Embrace the principles of diversity, equity and inclusion (“DEI”),
good corporate citizenship and social responsibility within the communities we can impact
1
• Environment: Minimize environmental impact of our global operations, with a focus on increased
renewable energy usage, reduced water consumption, greenhouse gas emissions and solid waste to
landfills
• Responsible Sourcing: Improve our suppliers’ environmental, labor, health & safety and ethical
practices
Environmental. Our operations are subject to federal, state, local and foreign laws, rules and regulations relating
to environmental concerns, including air emissions, wastewater discharges, solid and hazardous waste
management activities, and the safety of our employees. We endeavor to take actions necessary to comply with
such regulations. These steps include periodic environmental and health and safety audits of our facilities. The
audits, conducted by independent firms with expertise in environmental, health and safety compliance, include
site visits at each location, as well as a review of documentary information, to determine compliance with such
federal, state, local and foreign laws, rules and regulations. However, our environmental priorities extend well
beyond our compliance efforts, and include our focus on providing safe and effective products for consumers and
the environment, utilizing consumer friendly and environmentally responsible packaging, achieving greenhouse
gas emission reductions, reducing water usage, recycling waste and solid waste and improving our suppliers’
environmental practices.
Social. Our Social focus areas include our goals of delighting consumers with our brands through our
contributions towards a more sustainable world, improving our suppliers’ labor, health & safety and ethical
practices, and supporting our employees to create a stronger, more resilient company while contributing to a
better world. In their everyday work, employees embody our commitments to integrity, quality, and innovation,
and in doing so, directly contribute to our long-standing character and reputation. Employee safety is a top
priority. We develop and administer company-wide policies designed to ensure the safety of each team member
and compliance with OSHA standards and, during the height of the pandemic, we implemented COVID-19
protocols across all locations to ensure both the safety of our employees and compliance with federal and local
requirement and guidelines, and have continued these practices as the pandemic has moved into new stages
where appropriate or required. We embrace the diversity of our employees and believe that a diverse workforce
reflective of our consumer base fosters innovation and cultivates an environment filled with unique perspectives
and strive to promote a culture and processes that support and enhance our ability to recruit, develop and retain
diverse talent at every level. As part of our enhanced diversity and inclusion initiatives and our commitment to
transparency and accountability, in 2022, we began publishing workplace demographics of our employees in our
Sustainability Reports. We also encourage our employees to become involved in their communities through our
Employee Giving Fund and The Church & Dwight Philanthropic Foundation (the “Foundation”) which is
focused on helping to create DEI opportunities and advancing environmental preservation. The Foundation is
administered by our employees. See pages 12-13 in this Item 1 of this Annual Report under “Employees and
Human Capital” for a discussion of our human capital management.
Governance. Our governance focus includes the processes, rules, resources and systems in support of our
operational, sustainability and ESG efforts, have been described in our 2022 Proxy Statement and will be
described in our Proxy Statement for our upcoming Annual Meeting of Stockholders under the caption
“Sustainability Strategy and ESG Pillars” and in our 2022 Sustainability Report. Our Corporate Issues Council
(the “Council”), comprised of senior executives representing all of our key functional areas, guides the
integration of sustainability with all parts of our business and drives continuous improvement in our
sustainability approach and performance. The Council takes the lead in defining and implementing our
sustainability strategies across the six sustainability and ESG pillars. Our Board of Directors, acting principally
through its Governance, Nominating & Corporate Responsibility Committee, oversees our sustainability efforts,
with that Committee and the Compensation & Human Capital and Audit Committees each focusing on specified
areas of sustainability, including compliance and ethics, human capital and DEI. Our Independent Lead Director
is responsible for ensuring that stockholder requests, recommendations and proposals are evaluated by the
Governance, Nominating & Corporate Responsibility Committee, additional committees within the Board as
appropriate, and then by the Board of Directors, if needed.
2
As described in our Sustainability Reports, our continued progress in key areas of ESG has earned
recognition from various third parties.
We use the standards and guidelines of the Global Reporting Initiative, Sustainability Accounting Standards
Board industry specific standards and the Task Force on Climate-related Financial Disclosures to inform our
sustainability and ESG disclosures included in this Annual Report, our Proxy Statement and our Sustainability
Reports. The “materiality” thresholds in those standards and guidelines may differ from the concept of
“materiality” for purposes of the federal securities laws and disclosures required by the Commission’s rules in
this Annual Report. Moreover, the inclusion of sustainability and ESG disclosures in this Annual Report and in
our other filings with the Commission does not necessarily imply that we consider them to be material for
purposes of the federal securities laws or the Commission’s rules and regulations governing such disclosure.
FINANCIAL INFORMATION ABOUT SEGMENTS AND PRINCIPAL PRODUCTS
As discussed in more detail below, we operate in three principal segments: Consumer Domestic, Consumer
International, and our Specialty Products Division (“SPD”). Refer to Note 17 to the consolidated financial
statements included in this Annual Report and the discussion in “Item 7: Management’s Discussion and Analysis
of Financial Condition and Results of Operations” for information concerning the results of each of our
segments.
All domestic brand “rankings” contained in this Annual Report are based on dollar share rankings from
Information Resources, Inc. (“IRI”) Total US – Multi Outlet (“MULO”) for the period ending December 25,
2022. Foreign brand “rankings” are derived from several sources.
Recent Acquisitions
On October 13, 2022, we acquired all of the issued and outstanding shares of capital stock of Hero
Cosmetics, Inc. (“Hero”), the developer of the HERO® brand which includes the MIGHTY PATCH® acne
treatment products (the “Hero Acquisition”). We paid $546.8 million, net of cash acquired, at closing, and
deferred an additional cash payment of $8.0 million for five years to satisfy certain indemnification obligations,
if necessary. We also issued $61.5 million of restricted stock which will be recognized as compensation expense
as the restricted stock held for individuals who will continue to be employed by the Company vest. The vesting
requirements are satisfied at various dates over a three-year period from the date of the acquisition. Hero’s annual
net sales for the year ended December 31, 2022 were approximately $179.0 million. The Hero Acquisition was
financed with cash on hand and commercial paper borrowings and is managed in the Consumer Domestic
segment.
Consumer Domestic
Our founders first marketed sodium bicarbonate, otherwise known as baking soda, in 1846 for use in home
baking. Today, this product has a wide variety of uses in the home, including as a refrigerator and freezer
deodorizer, scratch-free cleaner and deodorizer for kitchen surfaces and cooking appliances, bath additive,
dentifrice, cat litter deodorizer and swimming pool pH stabilizer. We specialize in baking soda-based products,
as well as other products which use the same raw materials or technology or which are sold in the same markets.
Our Consumer Domestic segment includes each of our 14 power brands, as well as other well-known brands and
household and personal care products. We divide the Consumer Domestic segment into household and personal
care product groups.
Household Products
In 2022, household products constituted approximately 55% of our Consumer Domestic sales and
approximately 42% of our consolidated net sales.
3
ARM & HAMMER Baking Soda remains the number one leading brand of baking soda in terms of
consumer recognition of the brand name and reputation for quality and value. The cleaning and deodorizing
properties of baking soda have led to the development of numerous baking soda-based household products. For
example, we market ARM & HAMMER FRIDGE FRESH®, a refrigerator deodorizer equipped with a baking
soda filter to help keep food tasting fresher, and ARM & HAMMER Carpet Deodorizer. Our other primary
household products include laundry detergents marketed under the ARM & HAMMER, OXICLEAN and XTRA
brands, fabric softener sheets marketed under the ARM & HAMMER brand, cat litter under our ARM &
HAMMER brand, and household cleaning products under the CLEAN SHOWER®, SCRUB FREE®, ORANGE
GLO®, OXICLEAN and KABOOM® brands. Our laundry detergents constitute our largest consumer business,
measured by net sales.
Personal Care Products
In 2022, personal care products constituted approximately 45% of our Consumer Domestic sales and
approximately 35% of our consolidated net sales.
Our personal care business was founded on the unique strengths of our ARM & HAMMER trademark and
baking soda technology. We have expanded our personal care business through the acquisition of antiperspirants,
oral care products, depilatories, reproductive health products, oral analgesics, nasal saline moisturizers, cold
shortening and relief, acne treatment, and dietary supplements under a variety of other leading brand names.
ARM & HAMMER Baking Soda, when used as a dentifrice, helps whiten and polish teeth, removes plaque
and leaves the mouth feeling fresh and clean. These properties led to the development of a complete line of
sodium bicarbonate-based dentifrice products that are marketed and sold nationally primarily under the ARM &
HAMMER® brand name. Our other personal care products include antiperspirants and deodorants under the
ARRID® and ARM & HAMMER® brands, battery-operated toothbrushes under the SPINBRUSH® brand,
condoms under the TROJAN® brand (the number one condom brand in the U.S.), water flossers and
showerheads under the WATERPIK® brand (the number one water flosser and replacement showerhead brands
in the U.S.), home pregnancy and ovulation test kits under the FIRST RESPONSE® brand (the number two
selling brand in the U.S.), hair-removal products under the NAIR® brand (the number one depilatory in the U.S.),
beauty devices under the FINISHING TOUCH FLAWLESS® brand (the number one women’s electric hair
removal system in the U.S.), oral analgesics and oral care products under the ORAJEL® brand (the number one
oral care pain relief in the U.S.), children’s gummy dietary supplements under the L’IL CRITTERS® brand
(number two in the U.S.) and adult gummy dietary supplements under the VITAFUSION® brand (number one in
the U.S.), ZICAM® brand (the number one cold shortening category in the U.S. ), a growing number of hair
products under the BATISTE® (the number one dry shampoo in the U.S.), VIVISCAL® (the number one leading
supplement for thinning hair in the U.S), XFUSION® and TOPPIK® hair fiber brands (the number one leading
brand of hair fiber cosmetics for thinning hair in the U.S), THERABREATH® (the number two alcohol free
mouthwash in the U.S.), nasal saline moisturizers and solutions under the SIMPLY SALINE® brand, and
HERO® acne treatment products.
Consumer International
Our Consumer International segment markets a variety of personal care, household and over-the-counter
products in international subsidiary markets, including Australia, Canada, France, Germany, Mexico and the
United Kingdom. We also export to over 130 markets around the world, including China and Japan, through our
global markets group (the “Global Markets Group” or “GMG”) using a broad network of third-party distributors.
Total Consumer International net sales represented approximately 17% of our consolidated net sales in
2022. Net sales of the subsidiary businesses originating in Europe, Canada, Australia and Mexico accounted for
35%, 26%, 8% and 7%, respectively, of our 2022 international net sales in this segment. No other country in
which we operate accounts for more than 20% of our total international net sales and no product line accounts for
more than 20% of total international net sales.
4
Some of our U.S. power brands such as ARM & HAMMER, BATISTE, NAIR, OXICLEAN, TROJAN,
L’IL CRITTERS, SPINBRUSH, WATERPIK, ANUSOL, and VITAFUSION are distributed in many of our
international markets. In addition, we also export unique brands such as STERIMAR®, and FEMFRESH® out of
the United Kingdom as well as our FINISHING TOUCH FLAWLESS brand, to many countries around the
world.
We also market the CURASH® line of babycare products in Australia, and GRAVOL® anti-nauseant and
RUB-A535 topical analgesic in Canada and other international markets. We also sell WATERPIK water flossers
and showerheads in Australia, Canada, Germany, France, the United Kingdom, Mexico and in other international
markets.
Specialty Products Division
Our SPD segment focuses on sales to businesses and participates in three product areas: Animal and Food
Production, Specialty Chemicals and Specialty Cleaners, and accounted for approximately 6% of our
consolidated net sales in 2022.
Animal and Food Production Products
Since the ARM & HAMMER Animal and Food Production business began in 1972, with its launch of
ARM & HAMMER baking soda as a feed additive to help dairy cows produce more milk, we have built a
leading portfolio of nutritional supplements designed to help improve the health and productivity of dairy cows.
Today our portfolio of dairy nutritional supplements includes brands such as MEGALAC® rumen bypass fat– a
supplement made from natural oils – which enables cows to maintain energy levels during the period of high
milk production, resulting in improved milk yields. In addition, we market a line of high-quality protein and
amino acid products, including BIO-CHLOR® and FERMENTEN®, which are designed to help reduce health
issues associated with calving, as well as provide needed protein to ensure proper growth and milk production.
Over the last six years, we have expanded our product offerings to include unique prebiotics and probiotics.
CELMANAX® Refined Functional Carbohydrate is a yeast-based prebiotic that helps ensure a well-functioning
gastrointestinal track in dairy cows, beef cattle, poultry and other livestock. On May 1, 2017, we acquired the
Agro Biosciences, Inc. business and we now market the CERTILLUS® family of probiotics products in the
poultry, dairy, beef and swine industries. On March 8, 2018, we acquired Passport Food Safety Solutions, Inc.,
which is focused on providing pre- and post-harvest food safety solutions for beef, poultry, and swine primarily
for the application to carcasses to reduce food borne pathogens.
Specialty Chemicals
Our specialty chemicals business primarily encompasses the manufacture, marketing and sale of sodium
bicarbonate in a range of grades and granulations for use in industrial markets. In industrial markets, sodium
bicarbonate is used by other manufacturing companies as a leavening agent for commercial baked goods, as an
antacid in pharmaceuticals, as a carbon dioxide release agent in fire extinguishers, as an alkaline agent in
swimming pool chemicals, and as a buffer in kidney dialysis.
We and Occidental Chemical Corporation are equal partners in a joint venture, Armand Products Company,
which manufactures and markets potassium carbonate and potassium bicarbonate for sale in domestic and
international markets. The potassium-based products are used in a wide variety of applications, including
agricultural products, specialty glass and ceramics, and potassium silicates. Armand also manufactures a
potassium carbonate-based animal feed additive for sale by us in the dairy industry, described above under
“Animal and Food Production Products.” Armand’s results are included in our Corporate segment.
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Specialty Cleaners
We also provide a line of cleaning and deodorizing products for use in commercial and industrial
applications such as office buildings, hotels, restaurants and other facilities.
We and Safety-Kleen Systems, Inc. (“Safety-Kleen”) are equal partners in a joint venture, ARMAKLEEN®,
which has built a specialty cleaning products business based on our technology and Safety-Kleen’s sales and
distribution organization. In North America, this joint venture distributes our proprietary product line of aqueous
cleaners along with our ARMEX® blast media line, which is designed for the removal of a wide variety of
surface coatings. These results are included in our Corporate segment.
COMPETITION
We compete in the household and personal care consumer product categories, which are highly innovative
categories, characterized by a continuous flow of new products and line extensions, and require significant
advertising and promotion. We compete in these categories primarily on the basis of product innovation and
performance, brand recognition, price, value and other consumer benefits. Consumer products, particularly
laundry and dietary supplements, are subject to significant price competition. As a result, we, from time to time,
may need to reduce the prices for some of our products to respond to competitive and customer pressures and to
maintain market share. Product introductions typically involve heavy marketing and trade spending in the year of
launch, and we usually are not able to determine whether the new products and line extensions will be successful
until a period of time has elapsed following the introduction of the new products or the extension of the product
line.
Because of the competitive retail environment, we face pricing pressure from our retail customers and
customers selling through other channels, particularly high-volume retail customers including, internet-based
retailers, who have increasingly sought to obtain pricing concessions or better trade terms that could reduce our
margins. Furthermore, if we are unable to maintain price or trade terms acceptable to our customers, they could
increase product purchases from competitors and reduce purchases from us, which would harm our sales and
profitability.
Our competitors in the Consumer Domestic and Consumer International segments include, among others,
Procter & Gamble Company (“P&G”), The Clorox Company, Colgate-Palmolive Company, S.C. Johnson & Son,
Inc., Nestle Purina PetCare Company and Nestle Health Science, Haleon plc, Henkel, Reckitt Benckiser Group
plc, Johnson & Johnson, Pfizer Inc., Bayer AG, Alere Inc., NBTY, Inc., Koninklijke Philips N.V., Unilever PLC,
Sanofi and Pharmavite LLC. Many of these companies have greater financial resources than we do and have the
capacity to outspend us in their attempts to gain market share. In addition, the growing number of sales channels
and business models, such as niche brands, internet-only brands and retailer co-developed and owned brands,
have increased competition in certain product categories, particularly within personal care, specialty hair care and
dietary supplements, from less well capitalized competitors.
Competition within our animal and food production and our specialty chemicals product lines is intense.
The specialty chemicals business operates in a competitive environment influenced by capacity utilization,
customers’ leverage and the impact of raw material and energy costs. Product introductions typically involve
introductory educational costs in the year of launch, and we usually are not able to determine whether new
products and line extensions will be successful until a period of time has elapsed following the introduction of
new products or the extension of the product lines. Our key competitors with respect to our SPD segment are
Cargill Incorporated, Lallemand Inc., Solvay Chemicals, Inc., Genesis Alkali and Natural Soda, Inc. For
additional discussion of the competitive environment in which we conduct our business, see Item 1A, “Risk
Factors.”
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DISTRIBUTION OF OUR PRODUCTS
Our Consumer Domestic and Consumer International segments products are marketed primarily through a
broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores,
convenience stores, home stores, dollar and other discount stores, pet and other specialty stores, and websites and
other e-commerce channels, all of which sell our products to consumers. The Consumer Domestic Segment
employs a sales force based regionally throughout the U.S. and utilizes the services of independent brokers, who
represent our products in the food, mass, pet, dollar, club, and numerous other classes of trade. Our Consumer
International segment conducts business through subsidiaries and global export markets. Our subsidiaries employ
local sales and marketing teams that manage the retailer and trade relationships while export sales and marketing
professionals also manage an extensive distributor network in our global export markets. Our products are stored
in our plants and third-party owned warehouses and are either delivered by independent trucking companies or
picked up by customers at our facilities.
SPD markets sodium bicarbonate and other chemicals to industrial and agricultural customers primarily
throughout the U.S. and Canada. Distribution is accomplished through a dedicated sales force supplemented by
manufacturers’ representatives and independent distributors. Our products in this segment are stored in our plants
and public warehouses and are either delivered by independent trucking companies or picked up by customers at
our facilities.
SEASONALITY
Our business is generally not seasonal, although the Consumer Domestic and Consumer International
segments are affected by sales of SPINBRUSH battery-operated toothbrushes and WATERPIK water flossers
(which typically are higher during the fall, in advance of the holiday season), sales of NAIR depilatories and
waxes (which typically are higher in the spring and summer months), sales of VITAFUSION and L’IL
CRITTERS dietary supplements and ZICAM cold shortening and relief products (which typically are slightly
higher in the fourth quarter of each year, in advance of the cold and flu season and renewed commitments to
health). In SPD, several of our Animal and Food Production products experience higher demand in warmer
weather months creating higher seasonal demand in the second and third quarters of the year.
RAW MATERIALS AND SOURCES OF SUPPLY
We manufacture sodium bicarbonate for our consumer and specialty products businesses at our plants
located at Green River, Wyoming and Old Fort, Ohio. The primary source of soda ash, a basic raw material used
in the production of sodium bicarbonate, is the mineral trona, which is found in abundance in southwestern
Wyoming near our Green River plant. We have adequate trona reserves under mineral leases to support our
sodium bicarbonate requirements for the foreseeable future.
We are a party to a partnership agreement with Tata Chemicals (Soda Ash) Partners, which mines and
processes trona reserves in Wyoming. We fulfill a substantial amount of our soda ash requirements through the
partnership and related supply and services agreements, enabling us to achieve some of the economies of an
integrated business capable of producing sodium bicarbonate and related products from the basic raw material.
We also have an agreement for the supply of soda ash from another company. The partnership agreement and
other supply agreements between the Tata Chemicals (Soda Ash) Partners and us are terminable upon two years
notice by either of us. We believe that sufficient alternative sources of soda ash supply are available.
We believe that ample sources of raw materials are available for all our other major products. Detergent
chemicals are used in a variety of our products and are available from a number of sources. Bottles, paper products
and clay are available from multiple suppliers, although we choose to source most of these materials from single
sources under long-term supply agreements in order to gain favorable economies of scale. We also use certifiable
sustainable palm oil derivatives in a number of products, including primarily in our rumen bypass fats products.
Alternative sources of supply are available in case of the disruption or termination of the supply agreements.
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The cost of raw materials, including surfactants, diesel fuel and oil-based raw and packaging materials used
primarily in our consumer businesses, were higher in 2022 relative to 2021, increasing our core commodity costs.
Increases in the prices of certain raw materials could materially impact our costs and financial results if we are
unable to pass such costs along in the form of price increases to our customers.
We utilize the services of third party contract manufacturers around the world for certain products.
PATENTS AND TRADEMARKS
Our trademarks appear in upper case letters throughout this Annual Report. The majority of our trademarks
are registered with either the U.S. Patent and Trademark Office or with the trademark offices of many foreign
countries. The ARM & HAMMER trademark has been used by us since 1867 and is a valuable asset and
important to the successful operation of our business. Our products are sold under many other valuable
trademarks held by us, including TROJAN, NAIR, ORAJEL, WATERPIK, FIRST RESPONSE, XTRA,
OXICLEAN, SPINBRUSH, BATISTE, SIMPLY SALINE, L’IL CRITTERS, VITAFUSION, ZICAM,
THERABREATH and HERO. Our portfolio of trademarks represents substantial value in the businesses using
the trademarks.
U.S. patents are currently granted for a term of 20 years from the date the patent application is filed.
Although we actively seek and maintain a number of patents, no single patent is considered significant to the
business as a whole.
CUSTOMERS AND ORDER BACKLOG
In the years ended December 31, 2022, 2021 and 2020, net sales to our largest customer, Walmart Inc. and
its affiliates (“Walmart”), were 24%, 24% and 23% respectively, of our consolidated net sales. No other
customer accounted for 10% or more of our consolidated net sales in the three-year period. The time between
receipt of orders and shipment is generally short, and as a result, backlog is not significant.
GOVERNMENT REGULATION
General
All of our products are subject to regulation by one or more U.S. agencies, including the U.S. Food and
Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Federal Trade Commission
(“FTC”), the Consumer Product Safety Commission (“CPSC”) as well as foreign agencies such as the European
Commission, Health Canada, the Australia Therapeutic Goods Administration, the Mexico Federal Commission
for Protection Against Health Risks (COFEPRIS) and others.
FDA regulations govern a variety of matters relating to our products, such as product development,
manufacturing, premarket clearance or approval, labeling, distribution and post-market surveillance including
complaint vigilance. The regulations adopted and standards imposed by the FDA and similar foreign agencies
evolve over time and can require us to make changes in our manufacturing processes and quality systems to
remain in compliance. These agencies periodically inspect manufacturing and other facilities. To maintain
certification of our quality system and certain of the technical files of our products, we must monitor and adapt to
changes to applicable standards. These changes may impose burdensome new requirements that require
significant investment or rework. If we fail to comply with applicable regulations and standards, we may be
subject to sanctions, including fines and penalties, the recall of products and cessation of manufacturing and/or
distribution.
In addition, we sell products that are subject to regulation under the Federal Insecticide, Fungicide and
Rodenticide Act and the Toxic Substances Control Act, both of which are administered by the EPA. Similar laws
exist in other markets and may apply to our products.
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We are also subject to regulation by the FTC and its counterparts in other jurisdictions in connection with
the content and truthfulness of our labeling, advertising, promotion, trade practices and other matters. The FTC
and foreign agencies have instituted numerous enforcement actions against companies for failure to adequately
substantiate claims made in advertising or for the use of otherwise false or misleading advertising claims. These
enforcement actions have resulted in consent decrees and the payment of civil penalties and/or restitution by the
companies involved. Such actions can result in substantial financial penalties and significantly restrict the
marketing of our products.
The CPSC and consumer protection agencies around the world have jurisdiction over consumer products,
regulates their safety and has authority over recalls. The CPSC administers the Poison Prevention Packaging Act
and has issued regulations requiring special child resistant packaging for certain products, including
pharmaceuticals, dietary supplements, and dietary substances, containing certain ingredients (e.g., iron). The
CPSC and similar foreign agencies also develop and enforce mandatory product safety standards to address
trending safety concerns, such as the use of button cell batteries or the presence of toxic chemicals in consumer
products.
Our relationship with certain union employees is regulated by various agencies of the countries, states,
provinces and other localities in which we sell our products.
Medical Device Clearance and Approval
To be commercially distributed in the U.S., a medical device must, unless exempt, receive clearance or
approval from the FDA pursuant to the Federal Food, Drug, and Cosmetic Act (“FDCA”). For lower risk class II
devices, we must generally submit a premarket notification requesting clearance for commercial distribution
known as a “510(k)” clearance. Our condoms, lubricants, STERIMAR nasal congestion relief, home pregnancy
test kits and WATERPIK professional dental products are regulated as class II devices. Some other low risk
devices, including SPINBRUSH and other battery powered toothbrushes, oral care products including
toothpastes, therapeutic massagers, nasal congestion relief and wound wash, wrist supports, WATERPIK water
flossers and HERO acne treatment products are in class I or are unclassified and are generally exempted from the
510(k) requirements. To obtain 510(k) clearance, a device must be determined to be substantially equivalent in
intended use and in safety and effectiveness to a benchmark device, or “predicate” that is already legally in
commercial distribution. Any modification to a 510(k) cleared device that could significantly affect its safety or
effectiveness, or that would constitute a change in its intended use, generally requires a new 510(k) clearance.
We may determine that a new 510(k) clearance is not required, but if the FDA disagrees, it may retroactively
require a 510(k) clearance and may require us to cease marketing or recall the modified device until 510(k)
clearance is obtained.
In many countries outside the United States, to distribute a medical device lawfully, we must demonstrate
conformity to local or regional standards for quality, safety and performance. For class II medical devices, we
must obtain either government approval or certification from an accredited and approved Notified Body (“NB”)
that also performs periodic planned and surprise audits of our files and our quality system. These audits are
shared in some cases, specifically among regulators in the U.S., Canada, Australia, Brazil, and Japan.
Modification to a certified device generally requires government or NB review and approval prior to
implementation of the change. Additionally, all safety incidents reported to a Health Authority must also be
reported to the NB.
OTC Pharmaceutical
We market over-the-counter (“OTC”) pharmaceutical products, such as anti-acne cream, anticavity
toothpaste, anticavity rinse, antiperspirant, hemorrhoid relief, skin protectant, antinauseant, oral analgesic and
sunscreen drug products, that are subject to FDA and foreign regulation. Under the U.S. OTC monograph system,
selected OTC pharmaceutical products are generally recognized as safe and effective and do not require the
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submission and approval of a new drug application. The FDA OTC monographs include well-known ingredients
and specify requirements for permitted indications, required warnings and precautions, allowable combinations
of ingredients and dosage levels. Pharmaceutical products marketed under the OTC monograph system must
conform to specific quality, formula and labeling requirements. Following the passage of the CARES Act, FDA
is updating and working to finalize current monographs, including those that affect our oral care products and
HERO sunscreens. With these new regulations, OTC products will now need to be “state of the art” and will have
significant focus on GMPs, especially manufacturing, final formulation testing, and safety incident reporting.
Products not in the monograph system can be deemed to be unapproved new drugs and can be forced from the
market. This is particularly the case for homeopathic drug products like certain ZICAM products. Both the FDA
and the FTC have taken the position that homeopathic products are unapproved new drugs. Regulatory action
against these products is deemed unlikely unless the products present an unreasonable safety risk. ZICAM
homeopathic products are not currently perceived to pose any such risk.
All facilities where OTC pharmaceutical products are manufactured, tested, packaged, stored or distributed
must comply with cGMP regulations and/or regulations promulgated by competent authorities in the countries
where the facilities are located. All of our pharmaceutical products are manufactured, tested, packaged, stored
and distributed according to cGMP regulations. The FDA performs periodic audits to ensure that our facilities
remain in compliance with all appropriate regulations. The failure of a facility to be in compliance may lead to a
breach of representations made to customers or to regulatory action against us related to the products made in
that facility, such as seizure, injunction or recall. Serious product quality concerns could also result in
governmental actions against us that, among other things, could result in the suspension of production or
distribution of our products, product seizures, loss of certain licenses or other governmental penalties, and could
have a material adverse effect on our financial condition or operating results. We are required to report serious
adverse events associated with the use of our OTC pharmaceutical products marketed in the U.S.
We cannot predict whether new legislation regulating our activities will be enacted or what effect any
legislation would have on our business.
Medical Device and OTC Pharmaceutical Postmarket Regulation
After a medical device and/or OTC pharmaceutical is commercialized, numerous regulatory requirements
apply, including:
•
•
•
•
•
international quality system regulations, including those of the FDA and other regulatory authorities,
impose current Good Manufacturing Practice (“cGMP”) requirements governing the methods used in,
and the facilities and controls used for, the design, manufacture, packaging, servicing, labeling, storage,
installation, and distribution of all finished medical devices and OTC pharmaceuticals intended for
human use;
global standards and regulations affecting product design and development, including requirements to
keep existing products current to the “state of the art,” and doing an ongoing assessment of the risk
acceptability, adopting risk control measures where appropriate, and re-assessing the clinical benefit;
labeling regulations, including a prohibition on product promotion for unapproved or “off label” uses;
the medical device and drug reporting regulation requiring a manufacturer to report to the regulatory
authorities if its drug or device may have caused or contributed to a death or serious injury or
malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to
recur and ongoing post-market surveillance of the product and like-products to continuously evaluate
the benefit/risk over the life of the product; and
regulations on corrections and removals which require a manufacturer to report recalls and field actions
to the regulatory authorities if initiated to reduce a risk to health posed by the device or to remedy a
violation of the applicable laws.
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Food Products
We market baking soda and animal feed products, such as rumen fermentation enhancers and Dietary
Cation-Anion Difference (“DCAD”) balancers that are also subject to FDA and foreign regulation. The Food
Safety Modernization Act (“FSMA”) regulates food and animal feed products and mandates preventive controls,
including hazard analysis, risk controls, supplier qualifications and controls and increased record keeping. FSMA
grants the FDA the authority to require mandatory recalls for products under certain conditions. The FDA is
currently in the process of establishing rules and guidance to implement the provisions of FSMA. The potential
impact of these rules and applicable guidance will be determined as they are published, and compliance plans
will be effected as necessary.
Dietary Supplements
The processing, formulation, safety, manufacturing, packaging, labeling, advertising, distribution,
importing, selling, and storing our gummy vitamin dietary supplements are subject to regulation by one or more
federal agencies, including the FDA, the FTC, the CPSC, the EPA, and by various agencies of the states and
localities in which our products are sold. The FDCA governs the composition, safety, labeling, manufacturing
and marketing of dietary supplements. Additionally, dietary supplements sold outside the U.S. may be regulated
as drugs.
It is unlawful to market as a dietary supplement any article that is approved as a new drug or is authorized
for investigation as a new drug for which substantial clinical investigations have been instituted and made public,
unless that article was first marketed as a dietary supplement or food. The FDA has authority to effectively void
that restriction through the issuance of a regulation finding the article lawful. The FDA has issued Warning
Letters to companies selling supplements with unapproved new dietary ingredients, unsafe food additives, and/or
drug claims.
Dietary ingredients that were not marketed in the U.S. before October 15, 1994 must be the subject of a new
dietary ingredient notification submitted to the FDA at least 75 days before the initial marketing, unless the
ingredient has been present in the food supply as an article used for food without being chemically altered. The
notification must provide evidence of a history of use or other evidence establishing that use of the dietary
ingredient is reasonably expected to be safe. The FDA may determine that notification does not provide an
adequate basis to conclude that a new ingredient is reasonably expected to be safe, which could effectively
prevent the marketing of the ingredient. In May 2022, the FDA issued draft guidance on enforcement policy with
regard to premarket notification of new dietary ingredients. Although the draft guidance was issued for public
comment and does not have the force of law, it is a strong indication of the FDA’s current thinking on the FDA’s
approach to enforcement. The FDA has signaled its intent to enforce the applicable statutes and regulations by
requiring submission of a pre-market safety notification for “new” dietary ingredients.
A company that uses a statement of nutritional support in labeling must possess information substantiating
that the statement is truthful and not misleading. If the FDA determines that a particular statement of nutritional
support is an unacceptable drug claim or an unauthorized version of a health claim, or if the FDA determines that
a particular claim is not adequately supported by existing scientific evidence or is otherwise false or misleading,
the claim could not be used and any product bearing the claim could be subject to regulatory action.
The FDA’s cGMP regulations govern the manufacturing, packaging, labeling and holding operations of
dietary supplement manufacturers. As with OTC products, the FDA performs periodic audits to ensure that our
dietary supplement facilities remain in compliance with all appropriate regulations. The failure of a facility to be
in compliance may lead to a breach of representation made to consumers or to regulatory action against us related
to the products made in that facility, seizure, injunction or recall. There is considerable uncertainty with respect
to the FDA’s interpretation and implementation of the cGMP regulations. The failure of a manufacturing facility
to comply with the cGMP regulations may render products manufactured in that facility adulterated and subjects
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those products and the manufacturer to a variety of potential FDA enforcement actions. The manufacturer,
packer, or distributor of a dietary supplement marketed in the U.S. whose name appears on the label of the
supplement is required to report serious adverse events associated with the use of that supplement to the FDA.
Additional legislation may be introduced which, if passed, would impose substantial new regulatory
requirements on dietary supplements. The effect of additional domestic or international governmental legislation,
regulations, or administrative orders, if and when promulgated, cannot be determined. New legislation or
regulations may require the reformulation of certain products to meet new standards and require the recall or
discontinuance of certain products not capable of reformulation.
HUMAN CAPITAL
Overview
Much of our success comes from our culture. Our people share a collective energy and ambition towards
making a difference supporting the greater good, by providing affordable, quality products for everyday life, as
reflected in our ESG and sustainability commitments, and by giving back to their communities. Our culture
generates a collective passion, strength and determination to make an outsized impact, every day.
Safety and Wellness
Employee safety remains our top priority. We develop and administer company-wide policies to ensure the
safety of each team member and compliance with OSHA standards.
Our Employees
As of December 31, 2022, we had approximately 5,250 global employees, an increase of approximately 125
compared to December 31, 2021. Approximately 87% of our workforce is located in the Americas, 10% in
Europe, Middle East, and Africa, and 3% in the Asia-Pacific region. About 49% of our employees are salaried
and about 51% are paid hourly wages. During fiscal 2022, our overall turnover rate was approximately 21.5%.
Our revenue per employee in fiscal 2022 was approximately $1.02 million.
Diversity, Equity and Inclusion
We embrace the diversity of our employees and, our DEI efforts aspire to help us achieve a more diverse
workforce. We also strive to cultivate a culture and processes that support and enhance our ability to recruit,
develop and retain diverse talent at every level.
As a company we remain committed to fair treatment, access, opportunity, and advancement, while at the
same time striving to identify and eliminate barriers that have prevented the full participation of underrepresented
groups.
In 2020, we established a Diversity & Inclusion Council that provides strategic direction, guidance and
advocacy for our DEI initiatives which is led by our Chief Executive Officer and our Director, Diversity &
Inclusion and includes diverse employees at every level from around the world. Our Board of Directors, acting
principally through its Compensation & Human Capital Committee, oversees our DEI efforts.
We are committed to transparency and accountability that will drive continuous progress. As part of our
enhanced diversity and inclusion initiatives and our commitment to transparency and accountability, in 2022 we
began publishing workplace demographics of our employees in our Sustainability Reports.
Hiring, Development and Retention
Our talent strategy is focused on attracting the best talent and recognizing and rewarding performance, while
continually developing, engaging and retaining our talented employees.
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We invest resources in professional development and growth as a means of improving employee
performance and improving retention. This includes our bi-annual “LEAP” (Leadership Empowerment
Achievement Program), which is aimed at continuous learning, professional training and development
opportunities, targeted leadership development courses for new and existing leaders of different levels of
seniority, tuition reimbursement, and job specific programs for our employees.
Compensation and Benefits
Attracting and retaining talent is a priority at Church & Dwight. We offer competitive pay and a range of
benefits that support the well-being of our increasingly diverse workforce. This includes offering competitive
salaries and wages, as well as benefits such as health insurance, retirement and profit-sharing plans, and paid
time off.
Employees are eligible for health insurance, prescription drug benefits, dental, vision, hospital indemnity,
accident, critical illness, and disability insurance, life insurance, health savings accounts, flexible spending
accounts, reproductive rights coverage, participation in savings plans, and identity theft insurance, in each case
subject to the terms and conditions of the applicable plans and programs.
Communities
We encourage our employees to become involved in their communities, and in 2022, our Employee Giving
Fund supported our communities by providing $1.3 million to 220 deserving community organizations through
annual grants, disaster relief, and other monetary support. Employees purchased back-to-school supplies online
to support disadvantaged youth, donated clothes and non-perishable items for clothing and food drives and
provided supplies for a summer camp and holiday dinner for families in need. The Foundation was established in
2020 with the focus on helping to create equitable and inclusive opportunities and advancing environmental
preservation. The Foundation is administered by our employees. In 2022, seven organizations were chosen and
received grants in aggregate totaling $915,000. In the DEI space, the following organizations received grants:
Junior Achievement, Bowie University and Virginia State University. In the Sustainability space, the following
organizations received grants: The Recycling Partnership, the Ocean Conservancy, Northeast Wilderness Trust,
and The Xerces Society for Invertebrate Conservation.
PUBLIC INFORMATION
We maintain a website at www.churchdwight.com and on the “Investors-Financial Information-SEC
Filings” page of our website we make available free of charge our Annual Reports on Form 10-K, our Quarterly
Reports on Form 10-Q, and our Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange
Commission (the “Commission”). Also available on the “Investors-Corporate Governance” page on our website
are our Corporate Governance Guidelines, charters for the Audit, Compensation, & Human Capital and
Governance, Nominating & Corporate Responsibility Committees of our Board of Directors (the “Board”), our
Code of Conduct and our Proxy Statement. We also publish a Sustainability Report that summarizes our business
and corporate responsibility commitments and accomplishments including those related to our environmental,
social, and governance performance. For more information regarding our sustainability strategy and ESG pillars
please see the “Responsibility” page on our website and the discussion under the capital “Our Sustainability
Strategy and Environmental, Social and Governance (“ESG”) Pillars” included above. Each of the foregoing is
also available in print free of charge and may be obtained upon written request to: Church & Dwight Co., Inc.,
500 Charles Ewing Boulevard, Ewing, New Jersey 08628, attention: Secretary. The information presented on our
website is not a part of this Annual Report and the reference to our website is intended to be an inactive textual
reference only.
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ITEM 1A. RISK FACTORS
The following risks and uncertainties, as well as other factors described elsewhere in this Annual Report or
in our other filings with the Commission, could, individually and collectively, have a material adverse impact on
our business, reputation, financial results, financial condition and/or the trading price of our Common Stock:
Business and Operational Risks
• We face intense competition in our markets.
We face intense competition from consumer products companies, both in the U.S. and in international
markets. Most of our products compete with other widely-advertised promoted and merchandised brands within
each product category and from retailers, including supermarkets, mass merchandisers, wholesale clubs,
drugstores, convenience stores, home stores, dollar and other discount stores, pet and other specialty stores and
websites and other e-commerce channels, which are increasingly offering private label and retailer-branded
brands and generic non-branded products in certain categories, which typically are sold at lower prices. In China,
in particular we face strong competition from local manufacturers offering both generic and branded products.
The use of evolving technology to develop more complex pricing models by retailers has led and may continue to
lead to pricing pressures in some categories. In addition, during times of economic uncertainty, consumers may
purchase more “private label” or other lower price brands, especially at a time of rising inflation. These
developments have increased competition in certain product categories in particular, including dietary
supplements, diagnostic kits and oral analgesics. In addition to competition across all our product categories,
there continues to be significant product competition in the gummy dietary supplement category, which has
grown from about 10 competitors a decade ago to more than 50 of significance in recent years. Shifting consumer
behavior, including accelerated shifts to online shopping which has been accelerated by the COVID-19
pandemic, have also increased competition in e-commerce in many of our categories, from our larger legacy
competitors and newer digitally native brands which have increasingly moved into consumer products and
staples.
Many of our competitors are large companies, including, among others, P&G, The Clorox Company,
Colgate-Palmolive Company, S.C. Johnson & Son, Inc., Nestle Purina PetCare Company and Nestle Health
Science, Haleon plc, Henkel, Reckitt Benckiser Group plc, Johnson & Johnson, Pfizer Inc., Bayer AG, Alere
Inc., NBTY, Inc., Koninklijke Philips N.V., Unilever PLC, Sanofi and Pharmavite LLC. Many of these
companies have greater financial resources than we do, and, therefore, have the capacity to outspend us on
advertising and promotional activities and introduce competing products more quickly and respond more
effectively to changing business and economic conditions than we can.
Our products generally compete on the basis of performance, brand recognition, price, value or other
benefits to consumers. Significant price competition may require us to reduce the prices for some of our products
to price levels that do not offset manufacturing cost increases, to respond to competitive and customer pressures
and to maintain market share. Increases to our prices, as a result of inflationary pressures or otherwise, could
cause declining sales of products whose prices we have increased. In response to ongoing inflationary pressures
and other factors, we have recently raised prices on many of our products across our global portfolio of brands
over the past few years. Ongoing periods of high inflation could lead to additional price increases on these or our
other products. Advertising, promotion, merchandising and packaging also have a significant impact on retail
customer decisions regarding the brands and product lines they sell and on consumer purchasing decisions. A
newly introduced consumer product (whether improved or newly developed) usually encounters intense
competition requiring substantial expenditures for advertising, sales promotion and trade merchandising. If a
product gains consumer acceptance, it normally requires continued advertising, promotional support and product
improvements to maintain its relative market position. If our advertising, marketing and promotional programs,
including the use of digital and social media to reach consumers, are not effective, our sales growth may decline.
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• A continued change in the retail environment and changing consumer preferences could cause our
sales to decline.
Despite increasing shifts to e-commerce, sales of our products remain highest in the traditional mass
merchandiser, food and drug retail stores, and our products are also sold in club stores and dollar stores channels.
However, alternative retail channels, including direct to consumer, e-commerce retailers, hard discounters,
subscription services and buying clubs, have become more prevalent and the volume of consumer products that
are sold through such alternative retail channels is continuing to increase, which may affect customer and
consumer preferences, including in response to the COVID-19 pandemic and market dynamics, including any
pricing pressures for consumer goods as retailers face added costs to build their e-commerce capacity. In
addition, a growing number of alternative sales channels and business models, such as niche brands, native online
brands, private label and store brands, direct-to-consumer brands and channels and discounter channels, have
emerged in the markets we serve driven, in part, by the COVID-19 pandemic. In particular, the growing presence
of, and increasing sales through, e-commerce retailers have affected, and may continue to affect, consumer
behavior or preferences (as consumers increasingly shop online and via mobile and social applications) and
market dynamics, including any pricing pressures for consumer goods as retailers face added costs to build their
e-commerce capacity. These trends have been magnified due to the COVID-19 pandemic in many of our
geographies. Further, consumer preferences continue to evolve due to a number of factors, including
fragmentation of the consumer market and changes in consumer demographics, including the aging of the general
population and the emergence of Millennials and Generation Z who have different spending, consumption and
purchasing habits; evolving consumer concerns or perceptions regarding ESG practices of manufacturers,
including, packaging materials, such as plastic packaging, and their environmental impact; greenhouse gas
emissions; waste disposal practices; a growing demand for natural or organic products and ingredients; changing
consumer sentiment toward non-local products or sources among Millennials and other demographic groups;
evolving consumer concerns or perceptions regarding the effects of ingredients or substances present in certain
consumer products; reduced brand loyalty; and concerns regarding human capital practices, including DEI.
We and many of our competitors have increased our online sales as a result of shifting consumer behavior,
benefiting from scale, brand recognition, and other factors. However, as consumers continue to shift their
behavior, retailers may incur higher e-commerce operating costs and will seek to recover those costs by passing
them onto customers and manufacturers. Additionally, we cannot predict the extent to which our increased
e-commerce demand will continue and a reduction in demand would have a negative impact on our sales.
• Volatility and increases in the price of raw and packaging materials or energy costs could erode our
profit margins.
The principal raw materials and packaging used by us and certain of our suppliers and contract
manufacturers include surfactants (cleaning agents), paper products and resin-based molded components.
Volatility, and increases in the costs of raw materials without offsetting price increases, disruptions in production
or transportation, or increases in the costs of energy, labor, shipping and other necessary services, or other
inflationary pressures, including market conditions, inflation, supplier capacity restraints, geopolitical
developments (including the ongoing conflict in Ukraine), port congestions or delays, transport capacity
restraints, or other disruptions, could significantly affect our profit margins if we are unable to pass along any
higher costs in the form of price increases or otherwise achieve cost efficiencies, such as in manufacturing and
distribution. Significant inflation of material, component and co-packer input costs impacted our gross margin in
2022, and we expect inflationary pressures to continue into 2023. While we have increased prices on a majority
of our products, there is no assurance that we will be able to fully offset any input costs increases, through cost
reduction programs or price increases of our products or enter locked-in price arrangements or hedge agreements,
especially given the competitive environment. Sustained, those price increases may lead to declines in volume as
competitors may reduce their prices or customers may decide not to pay higher prices, which could lead to sales
declines and loss of market share. While we seek to project tradeoffs between price increases and volume, our
projections may not accurately predict the volume impact of price increases. In addition, volatility in certain
commodity markets could significantly affect our production cost.
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From time to time, we use hedge agreements to mitigate the volatility of commodities and diesel fuel prices.
The hedge agreements are designed to add stability to product costs, enabling us to make pricing decisions and
lessen the economic impact of abrupt changes in prices over the term of the contract. However, in periods of
declining fuel or other commodity prices, the hedge agreements can have the effect of locking us in at above-
market prices.
• Loss of any of our principal customers could significantly decrease our sales and profitability.
A limited number of customers account for a large percentage of our net sales and/or net sales of specific
product lines. Walmart is our largest customer, accounting for approximately 24% of net sales in 2022, 24% of
net sales in 2021, and 23% of net sales in 2020. Our top four customers accounted for approximately 42% of net
sales in 2022 and our top three customers accounted for approximately 37% and 36% of net sales in 2021 and
2020, respectively. We expect that a significant portion of our net sales will continue to be derived from a small
number of customers and that these percentages may increase if the growth of mass merchandisers continues. As
a result, changes in the strategies of Walmart or any of our other largest customers, including a reduction in the
number of brands they carry or of shelf space they dedicate to private label products, could materially harm our
net sales and profitability. Changes in consumer behavior, including continued shifting to online shopping
instead of physical retail shopping as a result of the COVID-19 pandemic and other trends, could also impact our
sales to our largest customers. Some of our retail customers were forced to shut down during the height of the
pandemic, and others that reduced their hours, have not yet returned to full capacity which has impacted and may
continue to impact their orders. Some of our retail customers have experienced and may experience in the future
declining financial performance, which could affect their ability to pay amounts due to us on a timely basis or at
all. If these impacts are prolonged, they can further increase the difficulty of planning for operations. Moreover,
the use of evolving technology by our customers to develop more complex pricing models may lead to category
pricing pressures. We could also lose a significant customer due to customer service levels or real or perceived
product quality or appearance issues. As our business is based primarily upon individual sales orders rather than
long-term contracts and most customer agreements include customer termination rights after short notice, many
of our customers could reduce their purchasing levels or cease buying products from us at any time and for any
reason.
• Decreases in demand for our products would decrease our sales and profitability.
Factors that can affect demand include competitors’ products, advertising and pricing actions, inflationary
pressures, rates of unemployment, consumer confidence, health care costs, including increased costs as a result of
changes in federal regulations, significant shifts in government policies, the deterioration of economic or trade
relations between countries or regions, commodity costs, fuel and other energy costs and other economic factors
affecting consumer spending behavior, including gasoline and home heating oil pricing, reduced unemployment
benefits in periods of high unemployment, restrictions on travel and access to public spaces, and changes in tax
policies, other effects of governmental shutdowns or a lapse of appropriations or fear of exposure to or actual
impacts of a widespread disease outbreak. In particular, we derive a substantial percentage of our revenues from
sales of laundry detergent, and the continued customer demand for these products are critical to our future
success. Some products have seen decreasing demand in recent years, including condoms, as a result of
demographic and other changes. Recently we have experienced a decline in consumer spending for our most
discretionary brands, primarily WATERPIK and FINISHING TOUCH FLAWLESS. In addition, our
WATERPIK brand has also been impacted by a consumer shift to lower cost alternatives due primarily to
inflationary pressures and recessionary concerns. Most notably, a growing number of water flosser consumers are
continuing to switch to competitors’ value-branded products. Moreover, in the vitamin category there continues
to be a softening of growth from record high levels during the COVID-19 pandemic and significant product
competition coming from new category entrants. Additionally, if our vitamin fill rates (that is, the percentage of
customer orders we are able to timely fulfill) continue to be below historical levels, we are vulnerable to retail
customers limiting distribution of our vitamin products and consumers shifting their loyalty to competitors’
products. Also, our Passport Food Safety business has experienced sales and profit declines due to decreased
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demand driven by the COVID-19 pandemic and pressures from new competitive activities resulting from the loss
of exclusivity on a key product line. While the vitamins category saw an increase in demand as a result of the
COVID-19 pandemic, that demand has waned with the decreased prevalence of COVID-19 infections. However,
demand for these products has typically increased during winter months when consumers have increased rates of
flu and cold infection, and the continuing prevalence of increased social distancing and flu vaccination rates may
have a negative impact on this seasonal performance.
An increasing number of our products are more discretionary in nature and, therefore are more likely to be
affected by consumer decisions to control spending.
• We rely on the policies of our key retailer customers.
Larger and increasingly consolidated retailers have increasing influence, and have sought to obtain lower
pricing, special packaging inventory practices, logistics or other changes to the customer-supplier relationship as
a result of this influence. To the extent we provide concessions or better trade terms to those customers, our
profit margins are reduced. Further, if we are unable to effectively respond to the demands of our customers,
these customers could reduce their purchases of our products and increase their purchases of products from
competitors. Reductions in inventory by our customers, including as a result of consolidation in the retail
industry, or these customers managing their working capital requirements, could result in reduced orders for our
products and adversely affect our results of operations and cash flows for financial periods affected by such
reductions.
Protracted unfavorable market conditions have caused many of our customers to more critically analyze the
number of brands they sell, and reduce or discontinue certain of our product lines, particularly those products that
were not number one or two in their category.
In addition, private label and retail-branded products sold by retail trade chains are typically sold at lower
prices than branded products. As consumers look for opportunities to decrease discretionary spending, our
customers have discontinued or reduced distribution of some of our products to encourage those consumers to
purchase the customers’ less expensive and, in some cases, more profitable private label and retail-branded
products (primarily in the dietary supplements, diagnostic kits and oral analgesics categories).
• We have pursued and may continue to pursue strategic acquisitions and divestitures.
We may continue to pursue and consummate additional acquisitions, divestitures or substantial investments
in complementary businesses or products in the future. However, we may not be able to identify and successfully
negotiate suitable strategic acquisition at attractive valuations, obtain financing for future acquisitions on
satisfactory terms or otherwise complete future acquisitions. Potential acquisitions may be significantly larger
than the ones completed in the past and may require us to increase our levels of debt, potentially resulting in us
being assigned a lower credit rating. Recent increases in interest rates may make it more difficult to borrow at
attractive rates. In recent periods, competition from other consumer products companies that are seeking similar
opportunities has been particularly strong, and valuations for potential acquisition assets have been high, which
has placed pressure on our ability to identify, structure and execute transactions. In addition, acquisitions and
investments entail various risks, including the difficulty of entering new markets, product categories, or business
models, the challenges of integrating the operations and personnel of the acquired businesses or products, the
potential disruption of our ongoing business and the ongoing business of the acquired company, the need to
review and, if necessary, upgrade processes and systems of the acquired company to conform to our own
processes and systems and applicable legal and regulatory requirements, managing an increasingly broad and
complex range of businesses and products, and, generally, our potential inability to obtain the desired financial
and strategic benefits from the acquisition or investment. Any of these risks may divert management and other
resources, require us to incur unanticipated costs or delay the anticipated positive impact on our business and
results of the acquisition. The risks associated with assimilation are increased to the extent we acquire businesses
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that have stand-alone operations or businesses that are in new categories that cannot easily be integrated or
operations or sources of supply outside of the U.S. and Canada, for which products are manufactured locally by
third parties.
Acquired companies or operations or newly-created ventures may not be profitable or may not achieve sales
levels and profitability that justify the investments made. In addition, future acquisitions or investments could
result in substantial cash expenditures, the potentially dilutive issuances of new equity by us or the incurrence of
additional debt or business acquisition liabilities, the assumption of contingent liabilities, such as those relating to
advertising claims, environmental issues and litigation.
• Market category declines and changes to our product and geographic mix may impact the
achievement of our sales growth targets, planned pricing and financial results.
A significant percentage of our revenues come from mature markets that are subject to high levels of
competition. During 2022, approximately 83% of our sales were generated in U.S. markets. U.S. markets for
consumer products are considered mature and commonly characterized by high household penetration,
particularly with respect to our most significant product categories, such as laundry detergents, deodorizers,
household cleaning products, toothpastes, dietary supplements, antiperspirants and deodorants. Our ability to
quickly innovate to adapt our products to meet changing consumer demands is essential, especially in light of
e-commerce significantly reducing the barriers for even small competitors to quickly introduce new brands and
products directly to consumers. Even if we are successful in increasing sales within our product categories, a
continuing or accelerating decline in the overall markets for our products could have a negative impact on our
financial results. We have implemented price increases and may implement additional price increases in the
future, which may slow sales growth or create volume declines in the short term as customers and consumers
adjust to these price increases.
Adverse economic conditions continue to impact a portion of our businesses. Recently we have experienced
a decline in consumer spending for our most discretionary brands, primarily WATERPIK and FINISHING
TOUCH FLAWLESS. In addition, our WATERPIK brand has also been impacted by a consumer shift to lower
cost alternatives due primarily to inflationary pressures and recessionary concerns. Most notably, a growing
number of water flosser consumers are continuing to switch to competitors’ value-branded products. Moreover,
in the vitamin category there continues to be a softening of growth from record high levels during the COVID-19
pandemic and significant product competition coming from new category entrants. Additionally, if our vitamin
fill rates continue to be below historical levels, we are vulnerable to retail customers limiting distribution of our
vitamin products and consumers shifting their loyalty to competitors’ products. Our Passport Food Safety
business has continued to experience decreased demand driven by the pandemic and other pressures. In the fourth
quarter of 2022, we determined that a review of our ability to recover the carrying value of the global
FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain
products at a major retailer. This loss of distribution along with an expected continued decline in discretionary
consumption and higher interest rates resulted in an impairment charge as discussed in more detail in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual
Report on Form 10-K. Overall, we have continued to experience increased online sales. Potential recessionary
economic conditions may impact consumer demand for certain of our products and put downward pressure on
product prices.
• New products and product line extensions may not gain widespread customer acceptance, may be
otherwise discontinued, or cause sales of existing products to decline.
Our future performance and growth depend on our ability to successfully identify, develop and introduce
new products, product line extensions, products in adjacent categories to our current products, and anticipate
changes in consumer preferences. In addition, some of our products have shorter product life spans and depend
heavily on our ability to continuously and timely introduce innovative new products to the marketplace. The
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successful development and introduction of new products involves substantial research, development, marketing
and promotional expenditures, which we may be unable to recover if the new products do not gain widespread
market acceptance. New product development and marketing efforts, including efforts to enter markets or
product categories in which we have limited or no prior experience, have inherent risks. These risks include
product development or launch delays, competitor actions, regulatory approval hurdles and the failure of new
products and line extensions to achieve anticipated levels of market acceptance. In addition, if sales generated by
new products could result in a concomitant decline in sales of existing products.
Each year, we introduce new products, including launches into new “white space” categories, across the
majority of our marketed brands. However, there is no assurance that our new products will continue to have
widespread acceptance. From time to time, we have discontinued certain products and product lines, which
resulted in returns from customers, asset write-offs and shutdown costs. We may suffer similar adverse
consequences in the future to the extent we discontinue products that do not meet retailer or consumer
expectations or no longer satisfy consumer demand.
• We are subject to cost overruns and delays, regulatory requirements, and miscalculations in capacity
needs with respect to our expansion projects and our manufacturing facilities, as well as disruptions
to our manufacturing facilities and those of our contract manufacturers and other suppliers.
From time to time, we initiate planned and unplanned expansion projects with respect to our facilities and
those of our contract manufacturers and other suppliers which are subject to risks of, and we have from time to
time experienced, delay or cost overruns resulting from numerous factors, including the following: shortages of
equipment, materials or skilled labor; work stoppages; unscheduled delays in the delivery of ordered materials
and equipment; unanticipated cost increases; difficulties in obtaining necessary permits or in meeting permit
conditions; difficulties in meeting regulatory or quality requirements or obtaining regulatory approvals;
availability of suppliers to certify equipment for existing and enhanced regulations; design and engineering
problems; failure or delay of third party service providers; and civil unrest, labor disputes, natural disasters and
pandemics. If we were to experience delays or cost overruns in the future it could result in product allocation and
retailer frustration, the loss of a significant customer or customers and the material decrease of the sales of one or
more of our products. In addition, we could miscalculate our anticipated capacity needs in any of our categories,
such as our laundry detergent, cat litter and dietary supplement categories, including as a result of meeting the
anticipated demand of our customers, or expansion into new product lines or into new markets.
Additionally, the supply of our products depends on the uninterrupted efficient operation of our
manufacturing facilities and those of our contract manufacturers and other suppliers and our ability to meet
customer service levels. The manufacturing of certain of our products is concentrated in one or more of our
plants, contract manufacturers or other suppliers, with limited alternate qualified facilities available. Many of our
manufacturing processes and those of our contract manufacturers and other suppliers are complex and present
difficult technical challenges to obtain the manufacturing yields necessary to operate profitably and may require
complex and specialized equipment which can be expensive to repair or replace with required lead times of up to
a year.
Any event that disrupts or otherwise negatively impacts manufacturing facilities, manufacturing systems or
equipment, or contract manufacturers or other suppliers could result in the delivery of inferior products or our
ability to meet customer requirements or service levels.
• We rely on a number of contract manufacturers and suppliers, including sole source contract
manufacturers and suppliers for certain products, and supply chain issues may result in product
shortages or disruptions to the Company’s business.
We rely on a number of contract manufacturers and suppliers for certain of our commodities and raw
materials, including sole source suppliers for certain of our raw materials, packaging, product components,
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finished products and other necessary supplies. New suppliers must be qualified pursuant to our standards and
may also have to be qualified under governmental and industry standards and any other standards of our
customers, which can require additional investment and time. We could experience material disruptions in
production and other supply chain issues, largely because of shortages in supplier labor which continues to
impact the availability of many raw and packaging materials, which continues to result in out-of-stock
conditions. In addition, continued out-of-stock supplies or products due to supply chain issues may cause our
customers to switch to competitors’ products that are more available. Moreover, our relationships with customers
could be adversely affected if new or existing suppliers are unable to meet any standards set by us, government
or industry regulations, or our customers, if we are unable to contract with suppliers at the quantity, quality and
price levels needed for our business, if any of our key suppliers becomes insolvent, ceases or significantly
reduces its operations or experiences financial distress, or if any environmental, economic or other outside
factors impact its operations. We may be unable to qualify any needed new contract manufacturers or suppliers
or maintain supplier arrangements and relationships based on a variety of factors; we may be unable to contract
with suppliers at the quantity, quality and price levels needed for our business; certain of our suppliers may not
meet the standards of our customers or licensors; or certain of our key contract manufacturers or suppliers may
become insolvent or experience other financial distress or face closure or suspension of operations. If any of
these events occurs and we have failed to identify and qualify an alternative vendor, then we may be unable to
meet our contractual obligations and customer expectations, which could damage our reputation and result in lost
customers and sales, or the incurrence of fines or higher than expected expenses. Further, the COVID-19
pandemic caused worldwide increases in demand for some products and reduced demand for other products, we
have experienced continuing strain on our supply chain network and its ability to meet such demand.
• Reduced availability of transportation or disruptions in our transportation network could adversely
affect us.
We distribute our products and receive raw materials and packaging components primarily by truck, rail and
ship and through various ports of entry. Reduced availability of trucking, rail or shipping capacity due to labor
shortages, adverse weather conditions, natural disasters, including climatic events (including any potential effect
of climate change), allocation of assets to other industries or geographies or otherwise, work stoppages, closure
of operations due to government restrictions or sick employees or other impacts of pandemics, strikes or
shutdowns of ports of entry or such transportation sources, could lead to inflationary cost pressures, cause us to
incur unanticipated expenses and impair our ability to distribute our products or receive our raw materials or
packaging components in a timely manner, which could disrupt our operations, strain our customer relationships
and competitive position.
• Damage to the reputation of one or more of our leading brands could adversely affect us.
Our financial success is directly dependent on the reputation and success of our brands, particularly the
ARM & HAMMER, BATISTE, FIRST RESPONSE, NAIR, ORAJEL, OXICLEAN, TROJAN, L’IL CRITTERS
and VITAFUSION, SPINBRUSH, WATERPIK, XTRA, ZICAM, THERABREATH and HERO brands. The
effectiveness of these brands could suffer if our marketing plans or product initiatives do not have the desired
impact on a brand’s image or its ability to attract consumers. Our brands could suffer damage to their reputations
due to real or perceived, sustainability, quality or safety issues, including as a result of, among other things,
significant product recalls, product-related litigation, defects or impurities in our products, product misuse,
changing consumer perceptions of certain ingredients or environmental impacts (including packaging, energy
and water use and waste management), or allegations of product tampering. In addition, as our sales on various
e-commerce platforms grow, we may be unable to prevent sales of counterfeit, pirated, or stolen goods, unlawful
or unethical sales, unauthorized resellers online, or sales in violation of our policies. In the fourth quarter of
2022, we determined that a review of our ability to recover the carrying values of the global FINISHING
TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain products at a major
retailer. We have removed the FINISHING TOUCH FLAWLESS brand from our list of “power brands.”
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Additionally, claims made in our marketing campaigns may become subject to litigation alleging false
advertising and could cause us to alter our marketing plans and may affect sales or result in the imposition of
significant damages against us.
Widespread use of social media and networking sites by consumers has greatly increased the accessibility
and speed of dissemination of negative information. Negative online consumer reviews or inaccurate posting or
comments about us or our brands in the media or on any social networking website, whether accurate or
inaccurate, or the disclosure of non-public sensitive information through social media, could generate adverse
publicity that could damage the reputation of our brands. In addition, given the association of our individual
products with us, an issue with one of our products could negatively affect the reputation of our other products,
or us as a whole.
• We are subject to risks related to our expansion and international operations that could adversely
affect our results of operations.
Our ability to continue to grow our sales and profits is dependent on expanding in the locations in which we
already do business and entering into new geographic locations, both of which require significant resources and
investments which would affect our risk profile. Further, our international operations subject us to risks
customarily associated with foreign operations, including:
• Changing macroeconomic conditions in our markets, including as a result of inflation, interest rates,
volatile commodity prices and increases in the cost of raw and packaging materials, labor, energy and
logistics, which could impact our manufacturing operations and that of our third-party partners;
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currency fluctuations;
the Russia/Ukraine war;
• widespread health emergencies, such as COVID-19 or other pandemics or epidemics;
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import and export license and taxation requirements and restrictions;
trade restrictions, including local investment or exchange control regulations;
changes in tariffs and taxes;
the effect of foreign income taxes, value-added taxes and withholding taxes, including the inability to
recover amounts owed to us by foreign governments, and the determination of the U.S. Internal
Revenue Service (the “I.R.S.”) regarding the applicability of certain regulations, including the Foreign
Account Tax Compliance Act, to our international transactions;
the possibility of expropriation, confiscatory taxation or price controls;
restrictions on or the costs related to repatriating foreign profits back to the U.S.;
political or economic instability, and civil unrest;
potential disruption from wars and military conflicts, including the war in Ukraine, terrorism or other
types of violence;
disruptions in the global transportation network, such as work stoppages, strikes or shutdowns of ports
of entry or such other transportation sources, or other labor unrest;
extreme weather events resulting in power loss, damage to infrastructure and reduced economic
development in vulnerable areas;
compliance with laws and regulations concerning ethical business practices, including without
limitation, the U.S. Foreign Corrupt Practices Act and United Kingdom Bribery Act;
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the impact of the United Kingdom’s exit from the European Union, which has led to increased costs,
and/or complexity, aspects of which will persist whilst bilateral trade and cooperation deal governing
the future relationship between the United Kingdom and the rest of the world are negotiated;
difficulty in enforcing contractual and intellectual property rights;
regulatory and quality system requirements for certain products; and
difficulties in staffing and managing international operations.
The COVID-19 pandemic has had and may continue to have a negative impact on regional and global
economies, with reduced international travel, movement restrictions and social distancing measures, and
recessionary conditions in many countries. Major developments in trade relations, including the imposition of
new or increased tariffs or sanctions by the U.S. and/or other countries, and any emerging nationalist trends in
specific countries could alter the trade environment and consumer purchasing. All the foregoing risks could have
a significant impact on our ability to commercialize our products on a competitive basis in international markets.
In addition, in all foreign jurisdictions in which we operate, we are subject to laws and regulations that
govern foreign investment, foreign trade and currency exchange transactions. The recent imposition of tariffs on
products imported from certain countries in recent years has introduced greater uncertainty with respect to trade
policies and government regulations affecting trade between the U.S. and other countries. The sanctions
introduced in response to the Ukraine conflict have further exacerbated these issues. Major developments in trade
relations, including the imposition of new or increased tariffs by the U.S. and/or other countries, and any
emerging nationalist trends in specific countries could alter the trade environment and consumer purchasing
behavior which, in turn, could have a material effect on our balance sheet and results of operations. All the
foregoing risks could have a significant impact on our ability to commercialize our products on a competitive
basis in international markets and may have a material adverse effect on our results of operations and cash flows
or financial position.
• Failure to effectively utilize or successfully assert intellectual property rights, and the loss or
expiration of such rights, could materially adversely affect our competitiveness. Infringement by us of
third-party intellectual property rights could result in costly litigation and/or the modification or
discontinuance of our products.
We rely on trademark, trade secret, patent and copyright laws to protect our intellectual property rights. The
market for our products depends to a significant extent upon the value associated with our trademarks and brand
names. We own the material trademarks and brand names used in connection with the marketing and distribution
of our major products both in the U.S. and in other countries. While we hold several valuable patents on our
products, they may not serve as an effective barrier to entry for new competitors. Although most of our material
intellectual property is registered in the U.S. and in certain foreign countries in which we operate, we cannot be
sure that our intellectual property rights will be sufficient or effectively utilized or, if necessary, successfully
asserted. There is a risk that we will not be able to obtain and perfect our own intellectual property rights, or,
where appropriate, license from others intellectual property rights necessary to support our ability to
manufacture, import, export, market and/or sell certain products in certain countries or globally or launch new
product. We cannot be sure that these rights, if obtained, will not be invalidated, circumvented or challenged in
the future, and we could incur significant costs in connection with legal actions relating to such rights. In
addition, even if such rights are obtained in the U.S., the laws of some of the other countries in which our
products are or may be manufactured or sold do not protect intellectual property rights to the same extent as the
laws of the U.S. If other parties infringe our intellectual property rights, they may dilute the value of our brands
in the marketplace, which could diminish the value that consumers associate with our brands and harm our sales.
Our failure to perfect, successfully assert or license intellectual property rights could make us less competitive
and could have a material adverse effect on our business, including our ability to manufacture, import, export,
market and/or sell certain products within certain countries or globally, our operating results and our financial
condition.
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In addition, if our products are found to infringe intellectual property rights of others, the owners of those
rights could bring legal actions against us claiming substantial damages for past infringement and seeking to
enjoin manufacturing, importing, exporting, marketing and/or sale of the affected products in certain countries or
globally. If these legal actions are successful, in addition to any potential liability for damages from past
infringement, we could be required to obtain a license in order to continue to manufacture, import, export, market
and/or sell the affected products, in certain countries or globally potentially adding significant costs. We might
not prevail in any action brought against us or we may be unsuccessful in securing any license for continued use
and therefore have to discontinue the manufacture, importing, exporting, marketing and/or sale of a product in
certain countries or globally.
•
Impairment of our goodwill and other long-lived intangible and tangible assets may result in a
reduction in net income.
We have a material amount of goodwill, trademarks and other intangible assets, as well as other long-lived
tangible assets, which are periodically evaluated for impairment in accordance with current accounting standards.
Declines in our profitability and/or estimated cash flows related to specific intangible assets, as well as potential
changes in market valuations for similar assets and market discount rates, has resulted in impairment charges
from time to time, and may result in future impairment charges. In the fourth quarter of 2022, we determined that
a review of our ability to recover the carrying value of the global FINISHING TOUCH FLAWLESS intangible
assets was necessary based on the discontinuance of certain products at a major retailer. This loss of distribution
along with an expected continued decline in discretionary consumption and higher interest rates resulted in an
impairment charge as discussed in more detail in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this Annual Report on Form 10-K.
Regulatory and Litigation Risks
• We may be subject to product liability claims, withdrawals or recalls or other legal proceedings and
from time to time we are involved in litigation, arbitration or regulatory matters where the outcome is
uncertain and which could entail significant expense.
From time to time, we are subject to product liability or other product-related claims. We may be required to
pay for losses or injuries actually or purportedly caused by our products, including losses or injuries caused by
raw materials or other components provided by third party suppliers that are included in our products. Claims
could be based on allegations that, among other things, our products contain contaminants, are improperly tested,
labeled or designed, or provide inadequate instructions regarding their use or inadequate warnings of potential
dangers related to their use. Whether or not successful, product liability claims could result in negative publicity
that could harm our sales and operating results and the reputation of our brands. In addition, if one of our
products is found to be defective or non-compliant with applicable rules or regulations, we could be required to
withdraw or recall it, which could result in adverse publicity and significant expenses. Although we maintain
product liability and product recall insurance coverage, potential product liability or other product-related
damages claims and/or withdrawal and recall costs may exceed the amount of insurance coverage or may be
excluded under the terms of the policy.
• Litigation, arbitration or regulatory matters where the outcome is uncertain could entail significant
expense.
From time to time, we are the subject of, or party to, various pending or threatened legal actions (including
class actions), government investigations and proceedings, including, without limitation, those relating to,
commercial transactions, product liability, consumer, employment, antitrust, environmental, health, safety and
compliance-related matters. Such proceedings are subject to many uncertainties and the outcome of certain
pending or threatened legal actions, investigations and proceedings may not be reasonably predictable and any
related damages, injunctions and/or settlements may not be estimable.
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• Environmental matters create potential liability risks.
We must comply with various environmental laws and regulations in the jurisdictions in which we operate,
including those relating to the handling and disposal of solid and hazardous wastes and the remediation of
contamination associated with the use and disposal of hazardous substances. A release of such substances due to
accident or an intentional act could result in substantial liability to governmental authorities or to third parties.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in complying
with environmental laws and regulations.
•
Increasing focus and sensitivity by governmental, non-governmental organizations, customers,
consumers and investors to ESG issues, including those related to DEI, climate change, plastic usage
and ingredients, could result in increased operating or manufacturing costs, which could adversely
affect our business.
As climate change and other ESG issues become more prominent, so has scrutiny by federal, state and local
governments, non-governmental organizations and our customers, consumers and investors. This will likely
result in new or increased regulatory requirements such as the SEC’s recent disclosure proposal on climate
change and various state-level Extended Producer Responsibility programs, and customer and consumer
standards. In addition, our stakeholders are increasingly demanding transparency regarding our DEI efforts as
well as our efforts to mitigate our impacts on climate change, and to eliminate chemicals of concern and
otherwise reduce or mitigate adverse effects on the environment. For example, some of our major customers have
requested we respond to various questionnaires, including the CDP Climate Change, Water and Forests
Questionnaires, and use our responses and CDP scores to evaluate us. Compliance with these requirements,
standards and disclosure requests could cause disruptions in the manufacture of our products and/or result in
increase in operating costs. For example, we may be unable to obtain certain raw materials, and we have begun,
and will continue to experience, increased costs for those materials as a result of these obligations. We may also
be required to contribute funds to support recycling and other waste management infrastructure, and/or incur
costs associated with making necessary changes to our operations and controlling, assessing and reporting on
certain ESG metrics. These disruptions and additional costs could make our products more costly and less
competitive than other products, which would adversely affect our business.
• Any failure to achieve our ESG goals or to effectively respond to new or current legal, regulatory or
stakeholder ESG requirements could adversely affect our business and reputation.
While we strive to minimize adverse impacts of our global operations, our ability to achieve any stated ESG
goal, target, or objective is subject to numerous factors and conditions, many of which are outside of our control.
We could lose revenue if our consumers change brands, major retailers delist our products or our retail customers
move business from us because we have not effectively responded to regulatory requirements, complied with their
ESG requirements or met their expectations related to our sustainability efforts, including with respect to DEI,
climate change, plastic usage, or ingredients. In addition, our failure to achieve our stated ESG goals could result
litigation or adverse publicity, which could damage our reputation, reduce consumer demand and devalue our
brand equity. Further, ESG-conscious investors may choose not to invest in our securities if we do not comply
with their expectations, and investment managers may not include our securities in ESG-designated funds.
• Current and future laws and regulations in the countries in which we and our suppliers operate could
expose us to increased costs and other adverse consequences.
The development, manufacturing, processing, formulation (including stability), packaging, labeling,
marketing, distribution and sale of our products are subject to regulation by federal agencies, including the U.S.
FDA, the FTC, the EPA and the CPSC and foreign regulators and agencies. In addition, our and our suppliers’
operations are subject to the oversight of the Occupational Safety and Health Administration and the National
Labor Relations Board. Our activities are also regulated by various agencies of the states, localities and foreign
countries in which our products and their constituent materials and components are manufactured and sold.
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In particular, the FDA and foreign counterparts regulate the formulation, safety, development,
manufacturing, packaging, labeling and distribution of condoms, home pregnancy and ovulation test kits, vaginal
lubricants, electric and battery powered medical devices, wound dressings, over-the-counter medicines and
dietary supplements, including vitamins, minerals, and homeopathic products. The FDA or a similar foreign
agency also exercises oversight over cosmetic products such as depilatories, hair care and skin care products. In
addition, under a memorandum of understanding between the FDA and the FTC, the FTC has jurisdiction over
the promotion and advertising of these products, and the FTC regulates the promotion and advertising of our
other products as well. As part of its regulatory authority, the FDA may periodically conduct inspections of the
physical facilities, machinery, processes and procedures that we and our suppliers use to manufacture regulated
products and may identify compliance issues that would require us and our suppliers to make certain changes in
our manufacturing facilities and processes. The failure of a facility to be in compliance may lead to regulatory
action against the products made in that facility, including seizure, injunction or recall, as well as to possible
action against the owner of the facility/manufacturer. We may be required to make additional expenditures to
address these issues or possibly stop selling certain products until the compliance issue has been remediated.
Likewise, any future determination by the FDA, the EPA or a similar foreign agency, or by us in reviewing
our compliance with applicable rules and regulations, that our products or quality systems do not comply with
applicable regulations could result in future compliance activities, including product withdrawals or recalls,
import detentions, injunctions preventing the shipment of products, or other enforcement actions. For example,
the FDA may determine that a particular claim that we use to support the marketing of a product is not
substantiated, may not accept the evidence of safety for a new product that we may wish to market, may
challenge the safety or effectiveness of existing products based on, among other things, changes in formulations,
inadequate stability or “shelf-life,” consumer complaints, or improper labeling, and may determine that our
dietary supplement business manufacturing, packaging, labeling and holding operations do not comply with
cGMPs. Similarly, we may identify these or other issues in internal compliance reviews of our operations and the
operations and products of vendors and acquired companies. These other issues may include the identification of
contaminants or non-compliant levels of particular ingredients. Any of the foregoing could subject us to adverse
publicity, force us to incur unanticipated costs and have a material adverse effect on our business, financial
condition, results of operations and cash flows. Additionally, delays in the acceptance, review and approval of
products by the FDA or the EPA, or other required governmental approvals, may result from government
shutdowns due to the failure by Congress to enact regular appropriations.
We are subject to regulations regarding the transportation, storage or use of certain chemicals to protect the
environment, as well as the Commission’s rules with respect to “conflict minerals.” Recent trade policies, tariffs
and government regulations affecting trade between the U.S. and other countries, as well as sanctions by the U.S.
and the European Union in response to the Russia/Ukraine war, have introduced greater uncertainty and
volatility. In addition, any additional or renewed significant governmental actions pertaining to the COVID-19
pandemic, including lockdowns, quarantines or other restrictions on the ability of our employees to travel or
perform necessary business functions or our ability to develop, manufacture, distribute, market or sell our
products, or the ability of our suppliers, customers or third-party partners to effectively run their operations, may
negatively impact our ability to manufacture, distribute, market and sell our products. We are not able to predict
the nature of these changes or of such future laws, regulations, repeals or interpretations or to predict the effect
additional or shifting governmental regulation, when and if it occurs, would have on our business in the future.
Such developments could require reformulation of certain products to meet new standards, recalls or
discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased
documentation of the properties of certain products, additional or different labeling, additional scientific
substantiation, expanded adverse event reporting or other new requirements.
There is also an increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties
in maintaining effective internal controls. Additionally, we could be subject to future inquiries or investigations
by governmental and other regulatory bodies, which may be delayed or disrupted due to any government
furlough. We could also be adversely affected by violations, or allegations of violations, of the Foreign Corrupt
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Practices Act and similar international anti-bribery laws. The Foreign Corrupt Practices Act and similar
international anti-bribery laws generally prohibit companies and their intermediaries from making improper
payments to government officials or other third parties for the purpose of obtaining or retaining business.
• We are subject to increasingly stringent privacy and security regulation.
We collect, use and store personal data of our employees, customers and other third parties in the ordinary
course of business, and we are required to comply with increasingly complex and changing data privacy and
security laws and regulations, that apply to the collection, storage, use, transmission and protection of personal
information and other consumer and employee data, including particularly the transfer of personal data between
or among countries. High-profile security breaches of the information systems of a number of government
agencies and U.S. companies may result in increased regulations and new security laws. The current
administration and Congress in the United States may seek to pass more stringent regulations in these areas, or
more aggressively enforce existing regulations.
Numerous local, municipal, state, federal and international law and regulations address privacy and security
including the California Online Privacy Protection Act, the Personal information Protection and Electronic
Documents Act, the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, the
Telephone Consumer Protection Act of 1991, the Health Insurance Portability and Accountability Act of 1996
(HIPAA), Section 5© of the Federal Trade Commission Act, and, the California Consumer Privacy Act (CCPA).
These privacy and security laws and regulations change frequently, and new legislation continues to be
introduced such as the California Privacy Rights Act (“ CPRA” ), which was effective on January 1, 2022 and
modifies the CCPA significantly, as well as the Virginia Consumer Data Protection Act, the Colorado Privacy
Act, Utah Consumer Privacy Act and Connecticut Data Privacy Act which will become effective in 2023. In
particular, the CCPA requires new disclosures to California consumers, gives California consumers new rights
with respect to their data, and permits California consumers to opt-out of certain sales of personal information.
The CCPA provides for fines of up to $7,500 per violation. Our website ecommerce and customer relations
businesses that store, process or transmit payment cardholder data are subject to be Payment Card Industry (PCI)
compliance requirements as mandated by the credit card companies (Visa, Mastercard, American Express and
Mastercard) and the Payment Card Institute Data Security Standard (PCI-DSS).
In Europe, the European Union (“EU”) has adopted strict data privacy regulations. Following the passage of
the EU’s General Data Protection Regulation ((EU) 2016/679) (“GDPR”) and the Regulation on Privacy and
Electronic Communications (the “ePrivacy Regulation”), data privacy and security compliance in the EU are
increasingly complex and challenging. The GDPR in particular has broad extraterritorial effect and imposes a
strict data protection compliance regime with significant penalties for non-compliance (up to 4% of worldwide
annual turnover or €20 million, whichever is higher). It is also important to note that many countries are
following the EU in producing a broad omnibus law in relation to privacy protection. In general, the GDPR and
ePrivacy Regulation, CCPA, and other local privacy laws, could also require adaptation of our technologies or
practices, increased costs and changes to operations to satisfy local privacy requirements and standards.
We may also face audits or investigations by one or more domestic or foreign government agencies relating
to our compliance with these regulations. An adverse outcome under any such investigation or audit could
subject us to fines, penalties or orders to cease, delay or modify collection, use or transfers of personal data. We
could also face rights requests, complaints, claims, or litigation from those persons whose data we collect, use
and store as well as government investigations and fines. Any of these events or other circumstances related to
our collection, use and transfer of personal data could also lead to negative media attention, damage to our
reputation in the market or otherwise adversely affect our business.
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• Changes in tax laws and regulations or in our operations may impact our effective tax rate and may
adversely affect our business, financial condition and operating results.
Our future effective tax rate could be affected by changes in tax laws and regulations or their interpretation,
changes in the mix of earnings in countries with differing statutory tax rates, or changes in the valuation of
deferred tax assets and liabilities. In addition, we evaluate our deferred income tax assets and record a valuation
allowance if it is “more likely than not” that all or a portion of the deferred tax asset will not be realized. If the
actual amount of our future taxable income is less than the amount we are currently projecting with respect to
specific tax jurisdictions, or if there is a change in the time period within which the deferred tax asset becomes
deductible, we could be required to record a valuation allowance against our deferred tax assets. The recording of
a valuation allowance would result in an increase in our effective tax rate and would have an adverse effect on
our operating results. In addition, changes in statutory tax rates may change our deferred tax assets or liability
balances, which would also impact our effective tax rate.
• Resolutions of tax disputes may adversely affect our earnings and cash flow.
Significant judgment is required in determining our effective tax rate and in evaluating our tax positions.
We provide for uncertain tax positions with respect to tax positions that do not meet the recognition thresholds or
measurement standards mandated by applicable accounting guidance. Fluctuations in federal, state, local and
foreign taxes or changes to uncertain tax positions, including related interest and penalties, may impact our
effective tax rate and our financial results. We are regularly under audit by tax authorities, and although we
believe our tax estimates are reasonable, the final outcome of tax audits and related litigation could be materially
different than that reflected in our historical income tax provisions and accruals. In addition, when particular tax
matters arise, a number of years may elapse before such matters are audited and finally resolved. Favorable
resolution of such matters could be recognized as a reduction to our effective tax rate in the year of resolution.
Unfavorable resolution of any tax matter could increase the effective tax rate. Any resolution of a tax issue may
require the use of cash in the year of resolution.
• Our amended and restated bylaws include an exclusive forum provision.
Our amended and restated bylaws include an “exclusive forum” provision, which may limit the ability of
our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or
our directors or officers, which may discourage such lawsuits against us and our directors and officers. If a court
outside of Delaware were to find this exclusive forum provision inapplicable to, or unenforceable in respect of,
one or more of the specified types of actions or proceedings described above, we could incur additional costs
associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial
condition or results of operations or cash flows.
Financial Risks
• We have substantial indebtedness and we may incur substantially more debt in the future.
As of December 31, 2022, we had approximately $2,674.0 million of total consolidated indebtedness, net of
debt issuance costs. This amount of indebtedness could have important consequences, including:
• making it more difficult for us to satisfy our obligations;
•
•
•
•
limiting our ability to fund potential acquisitions;
requiring us to dedicate a portion of our cash flow from operations to payments on our indebtedness,
which would reduce the availability of cash flow to fund capital expenditures and other general
corporate purposes;
limiting our flexibility in reacting to general adverse economic conditions or changes in our business
and the industry in which we operate;
limiting our ability to repurchase our Common Stock; and
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•
placing us at a competitive disadvantage compared to our competitors that have less debt.
Additionally, our term and revolving facilities are subject to certain financial and other customary covenants.
In the event of a breach of those covenants, our lenders under each credit facility may be entitled to accelerate the
related debt (and any lenders in respect of any other debt to which a cross-default provision applies may be
entitled to accelerate such other debt), and we could be required to seek amendments or waivers under the debt
instruments or to refinance the debt. We may incur substantial additional indebtedness in the future to fund
acquisitions, to repurchase shares or to fund other activities for general business purposes. If additional new debt
is added to the current debt levels, the related risks that we now face could intensify. A substantial increase in our
indebtedness could also have a negative impact on our credit ratings. In this regard, a deterioration in our credit
ratings could adversely affect the interest rate available to us in future financings, as well as our liquidity,
competitive position and access to capital markets. The U.S. Federal Reserve has raised interest rates consistently
since March of 2022 and has signaled that it expects additional rate increases in the future, which could impact the
interest rates available to us for borrowings in the future. Any decision regarding future borrowings will be based
on the facts and circumstances existing at the time, including market conditions and impact to our credit ratings.
LIBOR, the interest rate benchmark previously used as a reference rate on our variable rate debt, including
our term and revolving credit facilities and interest rate swaps, is currently being phased out in favor of the
Secured Overnight Financing Rate (“SOFR”), which the Alternative Reference Rates Committee (the “ARRC”)
has identified as its preferred alternative rate to succeed LIBOR. Accordingly, each of our term and revolving
credit facilities now use SOFR-based rates in accordance with the ARRC’s recommendation. Given the inherent
differences between LIBOR and SOFR or any other alternative benchmark rate that may be established, there are
additional uncertainties regarding a transition from LIBOR, including but not limited to the impact this transition
may have on the cost of our variable rate debt and certain derivative financial instruments Since the initial
publication of SOFR in 2018, changes in SOFR have, on occasion, been more volatile than changes in other
benchmark or market rates, such as United States dollar LIBOR. We will also need to consider new contracts and
if they should reference an alternative benchmark rate or include suggested fallback language, as published by
the ARRC from time to time.
• Our business is exposed to domestic and foreign currency fluctuations.
We are exposed to foreign currency exchange rate risk (both transaction and translation) with respect to our
sales, profits, assets and liabilities denominated in currencies other than the U.S. Dollar. Outside of the U.S.,
sales and costs are denominated in a variety of currencies, including the Canadian Dollar, Euro, Pound, Mexican
Peso, Australian Dollar and Chinese Yuan, among others. A weakening of the currencies in which sales are
generated relative to the currencies in which costs are denominated would decrease operating profits and cash
flow. Changes in currency exchange rates may also affect the relative prices at which we purchase materials and
services in foreign markets. Although we, from time to time, enter into forward exchange contracts to reduce the
impact of foreign exchange rate fluctuations related to anticipated but not yet committed sales or purchases
denominated in the U.S. Dollar, Canadian Dollar, Pound, Euro, Mexican Peso, Australian Dollar and Chinese
Yuan, foreign currency fluctuations could have a material adverse effect on our business, financial condition and
results of operations.
General Risks
• We may not be able to successfully manage the demand, supply, and operational challenges associated
with the actual or perceived effects of the COVID-19 pandemic.
Our business and financial results have been, and may continue to be, negatively impacted by the fear of
exposure to or actual effects of the COVID-19 pandemic, including the emergence of new variants, such as, but
not limited to:
•
negative impact on the global and U.S. domestic economy, significant unemployment, and market
volatility;
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•
•
•
•
•
•
•
significant increases in or reductions in demand or significant volatility in demand for one or more of
our products, resulting in pressure on our operations and supply chain networks and the ability to meet
such demand;
adverse impacts on our supply chain, including manufacturing by the Company or third-party partners,
due to raw material, packaging or other supply shortages, labor shortages or reduced availability of
transport, port congestion and closures;
inability to meet our retailer orders and customers’ needs due to disruptions in our manufacturing and
distribution network, supply chain, or capacity constraints or those of our finished goods, raw
materials, or transportation suppliers;
continued shifts in consumer demand, including accelerated shifts to online shopping and increased
competition in e-commerce in many of our categories from our larger legacy competitors and newer
digitally native brands which have increasingly moved into consumer products and staples;
decreased demand for certain products as COVID-19 procedures continue to ease and we transition
from a pandemic to an endemic state;
pricing pressures on our products as retailers face added costs to build their e-commerce capacity; and
retailer fines related to our underperformance with respect to on time and in full shipments due to
restrictions on our ability to produce and deliver products as a result of employee absenteeism or
sickness, a tight trucking market or reduced shipping capacity, additional governmental or regulatory
actions, closures or other restrictions that limit or close our operating and manufacturing facilities or
those of our suppliers.
Despite our efforts to manage and remedy these impacts, their ultimate impact also depends on factors
beyond our knowledge or control, including the duration and severity of any such outbreak as well as third-party
or governmental actions taken to contain its spread and mitigate its public health effects. While the vast majority
of our products are consumer staples that generally are less vulnerable to decreases in discretionary spending
than other products, some of our products, particularly WATERPIK, FINISHING TOUCH FLAWLESS and
other personal care brands, are more discretionary in nature and, are more likely to be affected by consumer
decisions to control spending and the impact and duration of recessionary economic conditions. In the fourth
quarter of 2022, we determined that a review of our ability to recover the carrying values of the global
FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain
products at a major retailer. This loss of distribution along with an expected continued decline in discretionary
consumption and higher interest rates, resulted in an impairment charge as discussed in more detail in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual
Report on Form 10-K.
While the U.S. has announced that the COVID-19 health emergency will expire in May of 2023, the impact
of COVID-19, including the impact of restrictions imposed to combat its spread, could continue to result in
additional businesses being shut down, additional work restrictions and supply chains being interrupted, slowed,
or rendered inoperable, in particular if other new COVID-19 variants such as the Delta and Omicron were to
emerge. As a result, it may be even more challenging to obtain and process raw materials to support our business
needs, and more individuals could become ill, quarantined or otherwise unable to work and/or travel due to
health reasons or governmental restrictions. Also, governments may impose other laws, regulations or taxes
which could adversely impact our business, financial condition or results of operations. Further, as some of our
customers’ businesses are similarly affected, they might delay or reduce purchases from us, which could
adversely affect our results of our business, financial condition or results of operations. The potential effects of
COVID-19 also could impact many of the other risk factors described herein, but given the evolving health,
economic, social and governmental environments, such potential impact remains uncertain. While we expect the
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impacts of COVID-19 to continue to have an effect on our business, financial condition and results of operations
and cash flows, we are unable to predict the extent or nature of these impacts at this time.
• Our operating results have been, and could be in the future, adversely affected by natural disasters,
public health crises, political crises, or other catastrophic events, or unfavorable worldwide, regional
and local economic and financial market conditions.
Our operations, as well as the operations of our third-party manufacturers, suppliers and customers, may be
subject to disruption from a variety of causes, including a protracted economic downturn or recessionary
conditions, material shortages, inflation, financial difficulties, work stoppages, cyberattacks, and other
disruptions in information technology systems, demonstrations, political instability or uncertainty in the U.S. or
abroad, rising geopolitical tensions and hostilities (for example between China and Taiwan), disease outbreaks or
pandemics (for example, an outbreak of a virus such as COVID-19), acts of war, terrorism, fire, earthquakes,
flooding or other natural disasters, disruptions in logistics, fuel and energy costs (for example, the price of
gasoline), loss or impairment of key manufacturing sites, supplier capacity constraints, raw material and product
quality or safety issues, industrial accidents or other occupational health and safety issues. If a major disruption
were to occur, it could result in harm to people or the natural environment, delays in shipments of products to
customers or suspension of operations.
Other financial uncertainties in our major markets and unstable geopolitical conditions in certain markets,
including civil unrest and governmental changes, could undermine global consumer confidence and reduce
consumers’ purchasing power, thereby reducing demand for our products. Restrictions on our ability to transfer
earnings or capital across borders, price controls, limitations on profits, retaliatory tariffs, import authorization
requirements and other restrictions on business activities which have been or may be imposed or expanded as a
result of political and economic instability, deterioration of economic relations between countries or otherwise,
could impact our profitability. In addition, U.S. trade sanctions against countries designated by the U.S.
government as state sponsors of terrorism and/or financial institutions accepting transactions for commerce
within such countries could increase significantly, which could make it impossible for us to continue to make
sales to customers in such countries. The imposition of retaliatory sanctions against U.S. multinational
corporations by countries that are or may become subject to U.S. trade sanctions, or the delisting of our branded
products by retailers in various countries in reaction to U.S. trade sanctions or other governmental action or
policy, could also negatively affect our business. Ongoing political uncertainty in many countries, including the
ongoing political transition in Hong Kong, and the exit of the United Kingdom from the European Union have
created additional economic uncertainty and volatility in the financial markets. In February 2022, Russia invaded
Ukraine and we have experienced, and expect to continue to experience, the indirect impacts of the conflict in
Ukraine, including increases in the cost of raw and packaging materials and commodities (including the price of
oil), supply chain and logistics challenges and foreign currency volatility, and it is not possible to predict the
broader or longer-term consequences of this conflict or the sanctions imposed to date. Increasing natural disasters
in connection with climate change could also be a direct threat to our third-party vendors, service providers or
other stakeholders, including disruptions of supply chains or information technology or other necessary services
for our Company.
• We rely significantly on information technology. Any inadequacy, interruption, theft or loss of data,
malicious attack, integration failure, failure to maintain the security, confidentiality or privacy of
sensitive data residing on our systems or other security failure of that technology could harm our
ability to effectively operate our business and damage the reputation of our brands.
We rely extensively on information technology systems, some of which are managed by third-party service
providers, to conduct our business. These systems include, but are not limited to, programs and processes relating
to internal communications and communications with other parties, ordering and managing materials from
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suppliers, converting materials to finished products, shipping product to customers, billing customers and
receiving and applying payment, processing transactions, summarizing and reporting results of operations,
complying with regulatory, legal or tax requirements, collecting and storing customer, consumer, employee,
investor, and other stakeholder information and personal data, and other processes necessary to manage our
business. We sell certain of our products directly to consumers online and through websites, mobile apps and
connected devices, and we offer promotions, rebates, customer loyalty and other programs through which it may
receive personal information, and we or our vendors could experience cyber-attacks, privacy breaches, data
breaches or other incidents that may result in unauthorized access, disclosure and misuse of consumer, customer,
employee, vendor or Company information.
Increased information technology security threats and more sophisticated computer crime, including
ransomware, denial of service and phishing attacks and advanced persistent threats, pose a potential risk to the
security of our information technology systems, networks, and services, and those of our customers and other
business partners, as well as the confidentiality, availability, and integrity of our data, and the data of our
customers and other business partners. As a result, our information technology systems, networks or service
providers could be damaged or cease to function properly or we could suffer a loss or disclosure of business,
personal or stakeholder information, due to any number of causes, including catastrophic events, power outages
and security breaches. Although we have business continuity plans in place and have implemented a breach
response plan to address service interruptions, if these plans do not provide effective alternative processes on a
timely basis, we may suffer interruptions in our ability to manage or conduct our operations which may adversely
affect our business. In addition, if our service providers, suppliers or customers experience a breach or
unauthorized disclosure or system failure, their businesses could be disrupted or otherwise negatively affected,
which may result in a disruption in our supply chain or reduced customer orders or other business operations.
Moreover, any costs related to a breach may exceed the amount of insurance coverage or be excluded under the
terms of our cybersecurity policy. As cyberattacks increase in frequency and magnitude, we may be unable to
obtain cybersecurity insurance in amounts and on terms we view as appropriate for our operations.
Our information technology systems and, our third-party providers’ systems, have been, and will likely
continue to be, subject to advanced computer viruses or other malicious codes, ransomware, unauthorized access
attempts, denial of service attacks, phishing, social engineering, hacking and other cyberattacks. These risks also
may be present to the extent any of our partners, distributors, joint venture partners or suppliers using separate
information systems, not integrated with our information systems, suffers a cybersecurity incident and could
result in increased costs related to their inability to timely deliver on their commitments to us and/or our
involvement in investigations or notifications conducted by these third parties. These risks may also be present to
the extent a business we have acquired that does not use our information systems, experiences a system
shutdown, service disruption, or cybersecurity incident. Due to the conflict in Ukraine, there is a possibility that
the escalation of tensions could result in cyberattacks that could either directly or indirectly affect our operations.
Such attacks may originate from nation states or attempts by outside parties, hackers, criminal organizations or
other threat actors. In addition, insider actors-malicious or otherwise-could cause technical disruptions and/or
confidential data leakage. To date, we have seen no material impact on our business or operations from these
attacks; however, we cannot guarantee that our security efforts will prevent attacks and resulting breaches or
breakdowns of our, or our third-party service providers’ databases or systems. In addition, although we have
policies and procedures in place governing the secure storage of personal information collected by us or our
third-party service providers, data breaches due to human error or intentional or unintentional conduct may occur
in the future, especially as we have shifted to more employees and other workers working remotely and having
access to our technology infrastructure remotely.
We continuously perform enterprise-wide upgrades to our systems and will continue to monitor and upgrade
systems as appropriate, legacy systems may be vulnerable to increased risk. Additionally, if a new system does
not function properly, it could affect our ability to order supplies, process and deliver customer orders and
process and receive payments for our products. This could adversely impact our results of operations and cash
flows. Upgraded or new technology may not function as designed and any such upgrades may not go as planned.
31
Moreover, because the techniques, tools and tactics used in cyberattacks frequently change and may be difficult
to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative
measures or fully mitigating harms after such an attack. As such, we may need to expend additional resources
and incur additional costs in the future to continue to protect against or address problems caused by any business
interruptions or data security breaches.
• We may not be able to attract, retain and develop key personnel.
The labor market in the United States is very competitive. Our future performance depends in significant
part upon the continued service of our executive officers and other key personnel, including at our plants.
Competition for qualified plant personnel has been intense. The loss of the services of one or more executive
officers or other key employees could have a material adverse effect on our business, prospects, financial
condition and results of operations. This effect could be exacerbated if any officers or other key personnel left as
a group or at the same time. Our success also depends, in part, on our continuing ability to attract, retain and
develop highly qualified and diverse personnel. Competition for such personnel is intense, and there can be no
assurance that we can retain our key employees or attract, assimilate and retain other highly qualified personnel
in the future, and the U.S. labor market has experienced wage inflation, sustained labor shortages, and a shift
towards remote work. Factors that may affect our ability to attract and retain sufficient numbers of key
employees include employee morale, our reputation, competition from other employers and the availability of
qualified personnel in a tightening labor market. We have experienced increased levels of personnel turnover in
recent years, increasing from an employee turnover rate of 14.9% in 2020 and 20.6% in 2021 to 21.5% in 2022.
We may continue to experience increased personnel turnover in the future compared to prior years, either as a
result of our business operations or other broad-based economic or cultural factors.
In addition, labor costs in the U.S. are rising. Labor cost is one of the primary components in the cost of
operating our business. If we face labor shortages and increased labor costs as a result of increased competition
for employees, higher employee turnover rates, increases in employee benefits costs, or labor union organizing
efforts, our operating expenses could increase and our growth and results of operations could be adversely
impacted. Labor shortages, higher employee turnover rates and labor union organizing efforts could also lead to
disruptions in our business. We may be unable to increase prices of our products in order to pass future increased
labor costs onto our customers, in which case our margins would be negatively affected. Additionally, if we
increase product prices to cover increased labor costs, the higher prices could adversely affect sales volumes.
• Our continued growth and expansion, reliance on third-party service providers and implementation
of new accounting standards could adversely affect our internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting for external purposes in accordance with generally accepted
accounting principles in the U.S. Because of its inherent limitations, internal control over financial reporting
cannot provide absolute assurance that a misstatement of our financial statements would be prevented or
detected. Our continuing growth and expansion in domestic and globally dispersed markets, such as our
acquisition of the ZICAM, THERABREATH, HERO and other businesses, may place significant additional
pressure on our system of internal control over financial reporting and require us to update our internal control
over financial reporting to integrate such acquisitions. Moreover, we engage the services of third parties to assist
with business operations and financial reporting processes, which injects additional monitoring obligations and
risk into the system of internal control. When we are required to comply with new or revised accounting
standards, we must make any appropriate changes to our internal control over financial reporting to fully
implement the standards, which may require significant effort and judgment. Any failure to maintain an effective
system of internal control over financial reporting could limit our ability to report our results of operations
accurately and on a timely basis, or to detect and prevent fraud and could expose us to regulatory enforcement
action and stockholder claims.
32
• Our business could be negatively impacted as a result of stockholder activism, an unsolicited takeover
proposal or a proxy contest or short sellers.
In recent years, proxy contests, unsolicited takeovers and other forms of stockholder activism have been
directed against numerous companies in our industry, including us. If such a campaign or proposal were to be
made against us, we would likely incur significant costs. Stockholder activists may also seek to involve
themselves in the governance, strategic direction and operations of our business, or in our ESG and sustainability
management and disclosure, through stockholder proposals or otherwise disrupting our business and diverting the
attention of our management and employees, and any perceived uncertainties as to our future direction resulting
from such a situation could result in the loss of potential business opportunities, the perception that we need a
change in the direction of our business, or the perception that we are unstable or lack continuity, which may be
exploited by our competitors, cause concern to our current or potential customers, and may make it more difficult
for us to attract and retain qualified personnel and business partners. Actions of activist stockholders may cause
significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors
that do not necessarily reflect the underlying fundamentals and prospects of our business. We may also be the
target of short sellers who engage in negative publicity campaigns that may use selective information that may be
presented out of context or that may misrepresent facts and circumstances.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We lease a corporate office building in Ewing, New Jersey for our global corporate headquarters. The lease
expires in 2033 and includes two 10-year extension terms at our option. In addition, we own an office building in
Fort Collins, Colorado and an office building in Princeton, New Jersey that is occupied by our research and
development department.
We own or lease manufacturing facilities, warehouses and other offices in 15 different U.S. states and 11
different countries outside of the U.S. Many of our domestic and international sites manufacture and distribute
products for multiple segments of our business. We believe that our operating and administrative facilities are
adequate and suitable for the conduct of our business. We also believe that our production facilities are suitable
for current manufacturing requirements for our consumer and specialty products businesses.
ITEM 3. LEGAL PROCEEDINGS
We, in the ordinary course of our business are the subject of, or party to, various pending or threatened legal
actions, government investigations and proceedings from time to time, including, without limitation, those
relating to commercial transactions, product liability, purported consumer class actions, employment matters,
antitrust, environmental, health, safety and other compliance related matters. Such proceedings are subject to
many uncertainties and the outcome of certain pending or threatened legal actions may not be reasonably
predictable and any related damages may not be estimable. Certain legal actions could result in an adverse
outcome for us, and any such adverse outcome could have a material adverse effect on our business, financial
condition, results of operations, and cash flows. There are no relevant matters to disclose under this Item for this
period.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
33
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our shares of common stock are traded on the New York Stock Exchange with the stock ticker symbol
“CHD”.
Approximate number of record holders of our Common Stock as of December 31, 2022: 1,700.
The following graph compares the yearly change in the cumulative total stockholder return on our Common
Stock for the past five fiscal years with the cumulative total return of the S&P 500 Index and the S&P 500
Household Products Index described more fully below. The returns are indexed to a value of $100 at
December 31, 2017. Dividend reinvestment has been assumed.
Comparison of Cumulative Five-Year Total Return among Company, S&P 500 Index and the S&P 500
Household Products Index(1)
(1) S&P 500 Household Products Index consists of the Church & Dwight Co., Inc., Clorox Company, Colgate-
Palmolive Company, Kimberly-Clark Corporation and P&G.
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN
Five-Year
Average
Annual
Return
Church & Dwight Co., Inc.
S&P 500 Index
S&P 500 Household Products Index
11.4%
9.4%
10.5%
Dollars
250.00
200.00
150.00
100.00
50.00
0.00
2017
2018
2019
2020
2021
2022
Company / Index
2017
2018
2019
2020
2021
2022
Church & Dwight Co., Inc. . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Household Products Index . . . . . . . . . . . . . . .
100.00
100.00
100.00
133.23
95.61
100.01
144.37
125.71
131.50
181.15
148.82
152.24
215.35
191.51
175.44
171.37
156.79
165.05
Share Repurchase Authorization
On October 28, 2021, the Board authorized a new share repurchase program under which the Company may
purchase 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 Company’s 2017 Share Repurchase Program.
The 2021 Share Repurchase Program does not modify the Company’s evergreen share repurchase program,
34
authorized by the Board on January 29, 2014, under which the Company may repurchase, from time to time,
Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive
plans.
As a result of our stock repurchases, there remains $729.7 million of share repurchase availability under the
2021 Share Repurchase Program as of December 31, 2022.
35
ITEM 6. RESERVED
36
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in
conjunction with our consolidated financial statements.
OVERVIEW
Our Business
We develop, manufacture and market a broad range of consumer household, personal care and specialty
products focused on animal and food production, chemicals and cleaners. We focus our consumer products
marketing efforts principally on our 14 “power brands.” These well-recognized brand names include ARM &
HAMMER®, used in multiple product categories such as baking soda, cat litter, carpet deodorization and laundry
detergent; TROJAN® condoms, lubricants and vibrators; OXICLEAN® stain removers, cleaning solutions,
laundry detergent and bleach alternatives; SPINBRUSH® battery-operated and manual toothbrushes; FIRST
RESPONSE® home pregnancy and ovulation test kits; NAIR® depilatories; ORAJEL® oral analgesic; XTRA®
laundry detergent; L’IL CRITTERS® and VITAFUSION® gummy dietary supplements; BATISTE® dry
shampoos; WATERPIK® water flossers and replacement showerheads; ZICAM® cold shortening and relief
products, THERABREATH® oral care products and HERO® acne treatment products. We reevaluate the
composition of our “power brands” from time to time, and in 2022 removed FINISHING TOUCH FLAWLESS®
products from our list of power brands and added HERO®.
We sell our consumer products under a variety of brands through a broad distribution platform that includes
supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar, pet and
other specialty stores and websites and other e-commerce channels, all of which sell the products to consumers.
We sell our specialty products to industrial customers, livestock producers and through distributors.
We operate our business in three segments: Consumer Domestic, Consumer International and the Specialty
Products Division (“SPD”). The segments are based on differences in the nature of products and organizational
and ownership structures. In 2022, the Consumer Domestic, Consumer International and SPD segments
represented approximately 77%, 17% and 6%, respectively, of our consolidated net sales.
Supply Chain, Inflation, Labor, Consumer Demand and Competition
Throughout 2022, adverse impacts to our business have been primarily supply chain related, including raw
material and labor shortages and interruptions, as well as distribution and transportation challenges. These
negative impacts have resulted in difficulty meeting consumer demand. In addition, these negative impacts
together with significant broad-based cost inflation have affected interest rates, input costs and consumer
behavior. In addition, government restrictions in China have further exacerbated global supply chain challenges
and have had a negative impact on Chinese consumer demand for our products in China. As restrictions in China
ease, we expect those impacts to our business in the future to be less severe. While it is difficult to predict when
conditions may improve, we expect raw material and labor shortages and input cost inflation to continue at least
through the first half of 2023.
To address challenges meeting retail customer demand for certain categories, including laundry detergent
and litter, we have taken steps to increase our short-term manufacturing capacity for those and other products 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
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CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
capacity and are continuing to enlist additional suppliers that meet our quality specifications. We continued to
see an improvement in fill rates in the fourth quarter, particularly in the household category, and we expect those
improvements to continue into 2023 across most product categories. While we have made significant progress
addressing our manufacturing capacity to meet consumer demand, there is no assurance that these challenges will
abate in the foreseeable future, or that the other measures we have or may implement will mitigate the impact of
supply disruptions or rising costs. If we continue to experience difficulty meeting consumer and retailer demand
over an extended period, retailers may decide to discontinue distribution of all or some of our products.
To attempt to offset some of our cost pressures, we have enacted and continue to evaluate price increases in
certain categories. However, we are also experiencing a decline in consumer spending for our most discretionary
brands, primarily WATERPIK and FINISHING TOUCH FLAWLESS. Our WATERPIK brand has also been
impacted by a consumer shift to lower cost alternatives due primarily to inflationary pressures and recessionary
concerns. Most notably, a growing number of water flosser consumers are continuing to switch to competitors’
value-branded products. In addition, due to the decline in consumer spending, a major retailer has discontinued
certain of our FINISHING TOUCH FLAWLESS products. If the decline in consumer spending for our
discretionary products persists over an extended period, we may not be able to increase prices to offset cost
inflation and retailers may further discontinue distribution of these products. To address these demand shifts, we
are taking steps to better manage production schedules and inventory levels for those products along with
increasing promotional activities and marketing spend, as well as continuing efforts to develop lower cost water
flosser alternatives.
In the vitamin category there continues to be a softening of growth from record high levels during the
COVID-19 pandemic and significant product competition coming from new category entrants. In the two-year
period from 2019 to 2021 our vitamin products experienced a net sales increase of over 50%. The category has
grown from about 10 competitors a decade ago to more than 50 of significance in recent years. Since 2019 alone,
over 35 new brands have entered the gummy category. We continue to evaluate and vigorously combat these
pressures through, among other things, new product introductions and increased marketing and trade spending.
However, there is no assurance this category will not decline in the future and that we will be able to offset any
such decline. Additionally, the fill rates for our vitamin products have been below historical levels, if we
continue to have challenges meeting customer demand, we are vulnerable to retail customers limiting distribution
of our vitamin products and consumers shifting their loyalty to competitors’ products.
Approximately 20% of our portfolio is comprised of discretionary products (WATERPIK and FINISHING
TOUCH FLAWLESS) and the vitamin business. In addition, our portfolio is comprised of 40% value products
and has a low exposure to private label which should help us to mitigate against a potential recessionary
environment. We expect share gains to continue as we invest in our brands and supply chain fill levels continue
to improve.
Looking forward, the impact that these challenges will continue to have on our operational and financial
performance will depend on future developments, including inflationary impacts, retail customer’s acceptance of
all or a portion of any price increases, our continued ability to obtain an adequate supply of products and
materials, the spread and severity of new COVID-19 variants, and the long-term impact of vaccines.
Additionally, we may be impacted by our ability to 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 in general. The impact of any of these potential future developments are
uncertain and difficult to predict considering the rapidly evolving landscape.
We are monitoring the impact of both inflation and recessionary indicators including the effect of
corresponding government actions, such as raising interest rates to counteract inflation, that may negatively
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CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
impact consumer spending, and how these factors will potentially influence future cash flows for the short and
long term. While we expect that many of these effects will be transitory and that our value focused portfolio
positions us well in inflationary and slowing economic environments, it is impossible to predict their impact.
2022 Financial Highlights
Key 2022 financial results include:
•
2022 net sales grew 3.6% over 2021, with gains in Consumer Domestic and SPD, partially offset by
lower sales in Consumer International. The gains are primarily due to favorable pricing/product mix in
all three segments and acquisitions in Consumer Domestic and Consumer International, partially offset
by unfavorable volumes in all three segments and unfavorable changes in foreign exchange rates in
Consumer International.
• Gross margin decreased 170 basis points to 41.9% in 2022 from 43.6% in 2021, primarily due to higher
manufacturing costs including labor, raw materials and components, and higher transportation and
commodity costs, as well as unfavorable volumes, partially offset by favorable price/product mix, the
impact of productivity programs, and business acquisition benefits.
• Operating margin decreased 970 basis points to 11.1% in 2022 from 20.8% in 2021, reflecting a lower
gross margin percentage and higher selling general and administrative costs (including the non-cash
Flawless intangible asset impairment charge of $411.0 or 760 bps and 2021’s favorable $98.0 or 190
bps Flawless business acquisition liability adjustments), partially offset by lower marketing expenses.
• We reported diluted net earnings per share in 2022 of $1.68 (including the non-cash Flawless
intangible asset impairment charge of $1.26 per share), a decrease of approximately 49.4% from 2021
diluted net earnings per share of $3.32 which included the favorable impact of the Flawless business
acquisition liability adjustments of $0.30 per share.
• Cash provided by operations was $885.2 in 2022, a $108.6 decrease from the prior year due to higher
working capital and lower cash earnings (net income adjusted for non-cash items).
• We returned $255.0 in 2022 to our stockholders through cash dividends paid.
Strategic Goals, Challenges and Initiatives
Our ability to generate sales depends on consumer demand for our products and retail customers’ decisions
to carry our products, which are, in part, affected by general economic conditions in our markets. While a vast
majority of our products are consumer staples and less vulnerable to decreases in discretionary spending than
other products, certain of our products, are more likely to be affected by consumer decisions to control spending.
Some customers have responded to economic conditions by increasing their private label offerings (primarily in
the dietary supplements, diagnostic kits and oral analgesics categories), launching their own brands, and
consolidating the product selections they offer to the top few leading brands in each category. In addition, an
increasing portion of our product categories are being sold by club stores, dollar stores, mass merchandisers and
internet-based retailers. These factors have placed downward pressure on our sales and gross margins.
We intend to continue to aggressively pursue several key strategic initiatives: maintain competitive
marketing and trade spending, tightly control our cost structure, expand our online market share, continue to
develop and launch new and differentiated products, and pursue strategic acquisitions. We also intend to continue
to grow our product sales globally and maintain an offering of premium and value brand products to appeal to a
wide range of consumers.
We derive a substantial percentage of our revenues from sales of liquid laundry detergent. As a result, any
delays or reduction of sales of these products, in the event that our product category diversification efforts
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CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
discussed below are not successful, could have a material adverse effect on our business, financial condition and
operating results and cash flows. We continue to evaluate and vigorously address these pressures through, among
other things, new product introductions and increased marketing and trade spending. However, there is no
assurance the category will not decline in the future and that we will be able to offset any such decline.
We are continuously focused on strengthening our key brands through the launch of innovative new
products, which span various product categories, including premium and value household products supported by
increased marketing and trade spending. There can be no assurance that these measures will be successful.
In the domestic business, seven out of 14 “power brands” met or exceeded category growth for the full year
2022. With the acquisition of HERO®, we have 14 “power brands”. Our global product portfolio consists of both
premium (60% of total worldwide consumer revenue in 2022) and value (40% of total worldwide consumer
revenue in 2022) brands, which we believe enables us to succeed in a range of economic environments. We
intend to continue to develop a portfolio of appealing new products to build loyalty among cost-conscious
consumers.
Over the past two decades, we have diversified from an almost exclusively U.S. business to a global
company with approximately 17% of sales derived from countries outside of the United States in 2022. We have
subsidiary operations in seven countries (Canada, Mexico, U.K., France, Germany, China and Australia). We
also export products to over 130 other countries through our Global Markets Group using a broad network of
third-party distributors. In 2022, we benefited from our expanded global footprint and expect to continue to focus
on selectively expanding our global business. If we are unable to expand our business internationally at the rate
that we expect, we may not realize our anticipated growth targets.
Although we believe ongoing international expansion represents a significant opportunity to grow our
business, our increasing activity in global markets exposes us to additional complexity and uncertainty. Sales
generated outside of the U.S. are exposed to foreign currency exchange rate fluctuations as well as political
uncertainty which could impact future operating results. Moreover, the current domestic and international
political environment, including existing and potential changes to U.S. policies related to global trade and tariffs,
have resulted in uncertainty regarding the global economy. The impact of U.S. tariffs on certain products was a
component of increased cost of sale during the year ended December 31, 2022. The implementation of more
restrictive trade policies, such as higher tariffs or new barriers to entry, in countries in which we manufacture or
sell large quantities of products could negatively impact our business, cash flows, results of operations and
financial condition.
We also continue to focus on controlling our costs. Historically, we have been able to mitigate the effects of
cost increases primarily by implementing cost reduction programs and, to a lesser extent, by passing along cost
increases to customers. We have also entered into set pricing and pre-buying arrangements with certain suppliers
and hedge agreements for diesel fuel and other commodities. Additionally, our focus on tight cost controls has
enabled us to effectively navigate recent challenging economic conditions. In 2022, due to the significant
increase in input costs, we have not been able to fully mitigate the impact of these increases with pricing, cost
control measures and productivity programs. We have, and will continue to, implement price increases to address
cost inflation. However, we cannot be certain that these price increases will be accepted by customers.
The identification and integration of strategic acquisitions are an important component of our overall
strategy and product category diversification. Acquisitions have added significantly to our sales, profits and
product category diversification over the last decade. This is evidenced by our 2015 acquisition of certain assets
of Varied Industries Corporation (the “Vi-cor Acquisition”), the 2016 acquisitions of Spencer Forrest, Inc., the
maker of TOPPIK (the “Toppik Acquisition”), and the ANUSOL and RECTINOL businesses from Johnson &
40
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Johnson (the “Anusol Acquisition”), the 2017 acquisitions of the VIVISCAL brand from Lifes2Good Holdings
Limited (the “Viviscal Acquisition”), Agro BioSciences, Inc. (the “Agro Acquisition”), and the WATERPIK
brand from Pik Holdings, Inc. (the “Waterpik Acquisition”), the 2018 acquisition of Passport Food Safety
Solutions, Inc. (the “Passport Acquisition”), the 2019 acquisition of the FINISHING TOUCH FLAWLESS
brand; the 2020 acquisition of the ZICAM brand from Consumer Health Holdco LLC, the 2021 acquisition of the
THERABREATH brand from Dr. Harold Katz, LLC and HK-IP International, Inc, and the 2022 acquisition of
the HERO brand which includes the MIGHTY PATCH acne treatment products. The failure to effectively
identify or integrate any acquisition or achieve expected synergies may cause us to incur material asset write-
downs. We actively seek acquisitions that fit our guidelines, and our strong financial position provides us with
flexibility to take advantage of acquisition opportunities. In addition, our ability to quickly integrate acquisitions
and leverage existing infrastructure has enabled us to establish a strong track record in making accretive
acquisitions. Since 2001, we have acquired 13 of our 14 “power brands”.
We believe we are well positioned to meet the ongoing challenges described above due to our strong
financial condition, experience operating in challenging environments and continued focus on key strategic
initiatives. Our focus is to maintain competitive marketing and trade spending, manage our cost structure,
continue to develop and launch new and differentiated products, while pursuing strategic acquisitions. This focus,
together with the strength of our portfolio of premium and value brands, has enabled us to succeed in a range of
economic environments. Moreover, the generation of a significant amount of cash from operations combined
with an investment grade credit rating, provides us with the financial flexibility to pursue acquisitions, drive new
product development, make capital expenditures to support organic growth and gross margin improvements,
return cash to stockholders through dividends and share buy backs, and reduce outstanding debt. These factors
position us to continue to increase stockholder value over the long-term.
For information regarding risks and uncertainties that could materially adversely affect our business, results
of operations and financial condition and cash flows, see “Risk Factors” in Item 1A of this Annual Report.
Recent Developments
Hero Acquisition
On October 13, 2022, we acquired all of the issued and outstanding shares of capital stock of Hero
Cosmetics, Inc. (“Hero”), the developer of the HERO® brand which includes the MIGHTY PATCH® acne
treatment products (the “Hero Acquisition”). We paid $546.8, net of cash acquired, at closing, and deferred an
additional cash payment of $8.0 for five years to satisfy certain indemnification obligations, if necessary. We
also issued $61.5 of restricted stock which will be recognized as compensation expense as the vesting
requirements for individuals who received the restricted stock and will continue to be employed by us are
satisfied. The vesting requirements are satisfied at various dates over a three-year period from the date of the
acquisition. Hero’s annual net sales for the year ended December 31, 2022 were approximately $179.0. The Hero
Acquisition was financed with cash on hand and commercial paper borrowings and is managed in the Consumer
Domestic segment.
Inflation Reduction Act of 2022
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which
contains provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on
stock buybacks. While we are still evaluating the impact of the Act, we do not expect any material changes on
our consolidated financial position, results of operations or cash flows.
41
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Dividend Increase
On February 1, 2023, the Board declared a 4% increase in the regular quarterly dividend from $0.2625 to
$0.2725 per share, equivalent to an annual dividend of $1.09 per share payable to stockholders of record as of
February 15, 2023. The increase raises the annual dividend payout from $255.0 to approximately $265.0.
Russia—Ukraine War
The global economy continues to be negatively impacted by the war 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 material shortages and increased costs for transportation, energy, and raw
material due in part to the negative impact of the Russia-Ukraine war on the global economy including European
energy market access to Russian energy sources. 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 our consolidated net sales and earnings.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements have been prepared in accordance with accounting principles
generally accepted in the U.S. (GAAP). The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. By their nature, these judgments are subject to uncertainty.
They are based on our historical experience, our observation of trends in industry, information provided by our
customers and information available from other outside sources, as appropriate. Our significant accounting
policies and estimates are described below.
Revenue Recognition and Promotional and Sales Return Reserves
Virtually all of our revenue represents sales of finished goods inventory and is recognized when received or
picked up by our customers. The reserves for consumer and trade promotion liabilities and sales returns are
established based on our best estimate of the amounts necessary to settle future and existing claims on products
sold as of the balance sheet date. Promotional reserves are provided for sales incentives, such as coupons to
consumers, and sales incentives provided to customers (such as slotting, cooperative advertising, incentive
discounts based on volume of sales and other arrangements made directly with customers). All such costs are
netted against sales. Slotting costs are recorded when the product is delivered to the customer. Cooperative
advertising costs are recorded when the customer places the advertisement for our products. Discounts relating to
price reduction arrangements and coupons are recorded when the related sale takes place. Costs associated with
end-aisle or other in-store displays are recorded when product that is subject to the promotion is sold. We rely on
historical experience and forecasted data to determine the required reserves. For example, we use historical
experience to project coupon redemption rates to determine reserve requirements. Based on the total face value
of Consumer Domestic coupons redeemed over the past several years, if the actual rate of redemptions were to
deviate by 0.1% from the rate for which reserves are accrued in the financial statements, a difference of
approximately $2.7 in the reserve required for coupons would result. With regard to other promotional reserves
and sales returns, we use experience-based estimates, customer and sales organization inputs and historical trend
analysis in arriving at the reserves required. If our estimates for promotional activities and sales returns reserves
were to change by 10% the impact to promotional spending and sales return accruals would be approximately
42
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
$15.9. While management believes that its promotional and sales returns reserves are reasonable and that
appropriate judgments have been made, estimated amounts could differ materially from actual future obligations.
Impairment of goodwill, trade names and other intangible assets
The Company has intangible assets of substantial value on its consolidated balance sheet. These intangible
assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill. The
Company determines whether an intangible asset (other than goodwill) has a useful life based on multiple
factors, including how long the Company intends to generate cash flows from the asset.
Carrying values of goodwill and indefinite-lived trade names are reviewed periodically for possible
impairment. Finite intangible assets are assessed when there are business triggering events. Our impairment
analysis is based on a discounted cash flow approach that requires significant judgment with respect to unit
volume, revenue and expense growth rates, and the selection of an appropriate discount rate and royalty rate.
Management uses estimates based on expected trends in making these assumptions. With respect to goodwill,
impairment occurs when the carrying value of the reporting unit exceeds the discounted present value of cash
flows for that reporting unit. For trade names and other intangible assets, an impairment charge is recorded for
the difference between the carrying value and the net present value of estimated future cash flows, which
represents the estimated fair value of the asset. Judgment is required in assessing whether assets may have
become impaired between annual valuations. Indicators such as unexpected adverse economic factors,
unanticipated technological change, distribution losses, or competitive activities and acts by governments and
courts may indicate that an asset has become impaired. The result of our annual goodwill impairment test
determined that the estimated fair value substantially exceeded the carrying values of all reporting units.
Fair value for indefinite lived intangible assets was estimated based on a “relief from royalty” or “excess
earnings” discounted cash flow method, which contains numerous variables that are subject to change as business
conditions change, and therefore could impact fair values in the future. We determined that the fair value of all
indefinite-lived intangible assets for each of the years in the three-year period ended December 31, 2022
exceeded their respective carrying values based upon the forecasted cash flows and profitability.
In recent years our global TROJAN business, specifically the condom category, has not grown and
competition has increased. In addition, profitability was negatively impacted throughout 2022 by inflation,
resulting in higher input costs and discount rates, and supply shortages for packaging materials. As a result, the
TROJAN business has experienced sales and profit declines that have eroded a significant portion of the excess
between the fair and carrying value of the tradename, which was $176.4 as of December 31, 2022. This
indefinite-lived intangible asset may be susceptible to impairment and a continued decline in fair value could
trigger a future impairment charge of the TROJAN tradename. While management can and has implemented
strategies to address the risk, significant changes in operating plans or adverse changes in the future could reduce
the underlying cash flows used to estimate fair values and could result in a decline in fair value that could trigger
future impairment charges of the asset.
Our global WATERPIK business has recently experienced a significant decline in customer demand for
many of its products, primarily due to lower consumer spending for discretionary products from inflation and a
growing number of water flosser consumers switching to more value-branded products. As a result, the
WATERPIK business has experienced declining sales and profits resulting in a reduction in expected future cash
flows which have eroded a substantial portion of the excess between the fair and carrying value of the tradename,
which was $644.7 as of December 31, 2022. This indefinite-lived intangible asset may be susceptible to
impairment and a continued decline in fair value could trigger a future impairment charge of the WATERPIK
tradename. While management can and has implemented strategies to address the risk, significant changes in
43
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
operating plans or adverse changes in the future could reduce the underlying cash flows used to estimate fair
values and could result in a decline in fair value that could trigger future impairment charges of these assets.
In the fourth quarter of 2022, we determined that a review of our ability to recover the carrying values of the
global FINISHING TOUCH FLAWLESS intangible assets was necessary based on the discontinuance of certain
products at a major retailer. The FINISHING TOUCH FLAWLESS assets consist of the definite-lived
tradename, customer relationships and technology assets recorded at acquisition. We evaluated our ability to
recover the carrying values of the intangible assets by comparing the carrying amount to the future undiscounted
cash flows and determined that the cash flows would not be sufficient to recover the carrying value of the assets.
After determining the estimated fair value of the assets, which included a reduction in cash flows due to the loss
of distribution mentioned above along with an expected continued decline in discretionary consumption and
higher interest rates, a non-cash impairment charge of $411.0 was recorded in the fourth quarter of 2022. The
remaining net book value of the tradename as of December 31, 2022 is $46.3 and will be amortized over a
remaining useful life of three years. We are implementing strategies to address the decline in profitability.
However, if unsuccessful, a further decline could trigger a future impairment charge.
It is possible that our conclusions regarding impairment or recoverability of goodwill or other intangible
assets could change in future periods if, for example, (i) the businesses or brands do not perform as projected,
(ii) overall economic conditions in future years vary from current assumptions (including changes in discount
rates), (iii) business conditions or strategies change from current assumptions, (iv) investors require higher rates
of return on equity investments in the marketplace or (v) enterprise values of comparable publicly traded
companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of
revenues and EBITDA. A future impairment charge for goodwill or intangible assets could have a material effect
on our consolidated financial position or results of operations.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized to reflect the future tax consequences attributable to the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which the differences are expected to be recovered or settled. Management
provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely
than not” to be realized. We record liabilities for potential assessments in various tax jurisdictions under U.S.
GAAP guidelines. The liabilities relate to tax return positions that, although supportable by us, may be
challenged by the tax authorities and do not meet the minimum recognition threshold required under applicable
accounting guidance for the related tax benefit to be recognized in the income statement. We adjust this liability
as a result of changes in tax legislation, interpretations of laws by courts, rulings by tax authorities, changes in
estimates and the expiration of the statute of limitations. Many of the judgments involved in adjusting the
liability involve assumptions and estimates that are highly uncertain and subject to change. In this regard,
settlement of any issue, or an adverse determination in litigation, with a taxing authority could require the use of
cash and result in an increase in our annual tax rate. Conversely, favorable resolution of an issue with a taxing
authority would be recognized as a reduction to our annual tax rate.
New Accounting Pronouncements
Refer to Note 1 to the Consolidated Financial Statements included in this Annual Report for recently
adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of
December 31, 2022.
44
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
The discussion of results of operations at the consolidated level presented below is followed by a more
detailed discussion of results of operations by segment. This section of this Form 10-K generally discusses 2022
and 2021 results and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and
year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of
our Annual Report on Form 10-K for the year ended December 31, 2021. The segment discussion also addresses
certain product line information. Our operating segments are consistent with our reportable segments.
Consolidated results
2022 compared to 2021
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percent of Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, General & Administrative Expenses . . . . . . . . . . . .
Percent of Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per share—Diluted . . . . . . . . . . . . . . . . . . . . . . . .
Net Sales
Twelve Months
Ended
December 31,
2022
$5,375.6
$2,250.0
Change vs.
Prior Year
3.6%
-0.6%
41.9% -170 basis points
$ 535.2
-7.4%
10.0% -110 basis points
Twelve Months
Ended
December 31,
2021
$5,190.1
$2,263.5
43.6%
$ 577.7
11.1%
$1,117.0
84.1%
$ 606.7
20.8% 910 basis points
11.7%
$ 597.8
-44.6%
$1,079.1
11.1% -970 basis points
1.68
-49.4%
$
20.8%
3.32
$
Net sales for the year ended December 31, 2022 were $5,375.6, an increase of $185.5, or 3.6% compared to
2021 net sales. The components of the net sales increase are as follows:
Net Sales—Consolidated
Product volumes sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pricing/Product mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange rate fluctuations / Other
Acquired product lines (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Sales increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
(5.1%)
6.5%
(1.0%)
3.2%
3.6%
(1) On October 13, 2022, we completed the Hero Acquisition. On December 24, 2021, we completed the
TheraBreath Acquisition. The results of these acquisitions are included in our results since the date of
acquisition.
The volume change reflects decreased product unit sales for all three segments. Price/mix was favorable in
all three segments.
Gross Profit
Our gross profit for 2022 was $2,250.0, a $13.5 decrease compared to 2021. Gross margin was 41.9% in
2022 compared to 43.6% in 2021, a 170 basis points (“bps”) decrease. The decrease is due to the impact of
45
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
higher manufacturing costs, including labor of 270 bps, higher commodities of 230 bps, the impact of lower sales
volumes of 110 bps, and higher transportation costs of 40 bps, partially offset by favorable price/mix of 320 bps,
the impact of productivity programs of 110 bps, and business acquisition mix benefits of 50 bps.
Operating Costs
Marketing expenses for 2022 were $535.2, a decrease of $42.5 compared to 2021. Marketing expenses as a
percentage of net sales decreased 110 bps to 10.0% in 2022 as compared to 2021 due to 80 bps on lower
expenses as we reduced spending throughout most of 2022 due to low case fill rates, and 30 bps of leverage on
higher net sales.
SG&A expenses for 2022 were $1,117.0, an increase of $510.3 or 84.1% compared to 2021. The increase is
primarily due to the non-cash Flawless intangible asset impairment charges of $411.0 and 2021’s favorable $98.0
Flawless business acquisition liability adjustments, partially offset by lower incentive compensation. SG&A as a
percentage of net sales increased 910 bps to 20.8% in 2022 compared to 11.7% in 2021. The increase is due to
950 bps on higher expenses (including the Flawless impairment), offset by 40 bps of leverage associated with
higher sales.
Other Income and Expenses
Other expense increased nominally in 2022 as compared to 2021.
Interest expense in 2022 was $89.6, an increase of $35.1. The increase is primarily due to higher average
debt outstanding and higher interest rates.
Taxation
The 2022 U.S. federal effective income tax rate was 20.9% compared to 19.8% in 2021. The increase in the
tax rate is primarily due to a lower tax benefit related to lower stock option exercises.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which
contains provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on
stock buybacks. While we are still evaluating the impact of the Act, we do not expect any material changes on
our consolidated financial position, results of operations or cash flows.
Segment results for 2022, 2021 and 2020
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 and ownership
structures. 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
The Corporate segment income consists of equity in earnings of affiliates. As of December 31, 2022, we
held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of
Armand and ArmaKleen, totaling $12.3, $9.4 and $6.7 for the three years ended December 31, 2022, 2021 and
2020, respectively, are included in the Corporate segment.
46
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Some of the 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 income before income taxes for each of the three years ended December 31, 2022,
2021 and 2020 were as follows:
Consumer
Domestic
Consumer
International
SPD
Corporate(3)
Total
Net Sales (1)
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before Income Taxes (2)
2022(4)
2021(5)
2020(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,131.0
3,941.9
3,767.6
$ 427.3
861.4
832.4
$896.1
912.2
828.2
$ 38.8
127.3
105.0
$348.5
336.0
300.0
$ 44.9
33.6
29.7
$ 0.0
0.0
0.0
$12.3
9.4
6.7
$5,375.6
5,190.1
4,895.8
$ 523.3
1,031.7
973.8
(1)
(2)
Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table,
were $15.1, $10.8 and $11.7 for the years ended December 31, 2022, 2021 and 2020, respectively.
In determining income before income taxes, interest expense, investment earnings and certain aspects of
other income and expense were allocated among segments based upon each segment’s relative income from
operations.
(3) Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen in 2022, 2021
and 2020.
(4) 2022 results include the Flawless non-cash intangible asset impairment charges of $411.0 in SG&A
expenses, of which $349.3 was recorded in the Consumer Domestic segment and $61.7 was recorded in the
Consumer International segment.
(5) 2021 results include a $98.0 reduction in SG&A expenses to reduce the Flawless business acquisition
liability, of which $83.2 was recorded to Consumer Domestic and $14.8 was recorded to Consumer
International.
(6) 2020 results include a $94.0 reduction of SG&A expenses to reduce the Flawless business acquisition
liability, of which $79.9 was recorded to Consumer Domestic and $14.1 was recorded to Consumer
International. During 2020, we sold our PERL WEISS toothpaste brand in Germany resulting in a reduction
in SG&A expenses of $3.0 recorded in Consumer International.
Product line revenues for external customers for the years ended December 31, 2022, 2021 and 2020 were
as follows:
Household Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personal Care Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,272.0
1,859.0
$2,103.0
1,838.9
$2,038.5
1,729.1
Total Consumer Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Consumer International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total SPD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,131.0
896.1
348.5
3,941.9
912.2
336.0
3,767.6
828.2
300.0
Total Consolidated Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,375.6
$5,190.1
$4,895.8
2022
2021
2020
47
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Household Products include deodorizing, cleaning and laundry products. Personal Care Products include
condoms, pregnancy kits, oral care products, skin care products, hair care products and gummy dietary
supplements.
Consumer Domestic
2022 compared to 2021
Consumer Domestic net sales in 2022 were $4,131.0, an increase of $189.1 or 4.8% compared to net sales of
$3,941.9 in 2021. The components of the net sales change are the following:
Net Sales—Consumer Domestic
Product volumes sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pricing/Product mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired product lines (1)
Net Sales increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
(5.9%)
6.8%
3.9%
4.8%
(1)
Includes the Hero and TheraBreath Acquisitions since the date of acquisition.
The increase in net sales for 2022 reflects the impact of the Hero and TheraBreath Acquisitions, and higher
net sales in ARM & HAMMER® Liquid Detergent, OXICLEAN® Powder, ARM & HAMMER® Cat Litter, and
BATISTE® dry shampoo, partially offset by declines in FINISHING TOUCH FLAWLESS® Hair Removal
Products, WATERPIK® Shower Heads, and VITAFUSION® and L’IL CRITTERS® gummy vitamins.
Consumer Domestic income before income taxes for 2022 was $427.3, a $434.1 decrease as compared to
2021. The decrease is due primarily to higher SG&A expenses of $437.7 (from the 2022 FINISHING TOUCH
FLAWLESS non-cash intangible asset impairment charge of $349.3 and the favorable reduction in the fair value
of the FINISHING TOUCH FLAWLESS business acquisition liability in 2021 of $83.2). Also impacting
Consumer Domestic was higher manufacturing and distribution expenses of $150.6, the impact of lower sales
volumes of $67.9, and higher interest and other expenses of $24.8, partially offset by a favorable price/mix of
$216.7 and lower marketing expenses of $29.1.
Consumer International
2022 compared to 2021
Consumer International net sales in 2022 were $896.1, a decrease of $16.1 or 1.8% as compared to 2021.
The components of the net sales change are the following:
Net Sales—Consumer International
Product volumes sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pricing/Product mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange rate fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired product lines (1)
Net Sales decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
(1.7%)
4.5%
(5.5%)
0.9%
(1.8%)
(1)
Includes the TheraBreath Acquisition since the date of acquisition.
48
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Excluding the impact of foreign exchange rates and acquired product lines, sales growth is driven by the
BATISTE and CURASH brands in Australia, the BATISTE, GRAVOL, and ARM & HAMMER® Cat Litter in
Canada, and the BATISTE brand in Europe.
Consumer International income before income taxes was $38.8 in 2022, a decrease of $88.5 compared to
2021 due to higher SG&A expenses of $78.1 (from the 2022 FINISHING TOUCH FLAWLESS non-cash
intangible asset impairment charge of $61.7 and favorable reduction in the fair value of the FINISHING TOUCH
FLAWLESS business acquisition liability in 2021 of $14.8). Also impacting Consumer International was higher
manufacturing and commodity costs of $38.6, unfavorable foreign exchange rates of $19.4, and the impact of
lower sales volumes of $4.3, partially offset by a favorable price/mix of $34.0, lower marketing expenses of
$17.1, and lower interest and other expenses of $0.6.
Specialty Products
2022 compared to 2021
SPD net sales were $348.5 for 2022, an increase of $12.5, or 3.7% compared to 2021. The components of
the net sales change are the following:
Net Sales—SPD
Product volumes sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pricing/Product mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Sales increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
(5.1%)
8.8%
3.7%
Net sales increased primarily due to higher pricing in our dairy and specialty chemicals segments in
response to rising costs.
SPD income before income taxes was $44.9 in 2022, an increase of $11.3 compared to 2021. The increase in
income before income taxes for 2022 is due primarily to favorable price/product mix of $29.7 and lower SG&A
costs of $12.1, which were offset by unfavorable manufacturing costs of $20.8, higher interest and other
expenses of $5.8, the impact of lower sales volumes of $3.8 and higher marketing expenses of $0.1.
Corporate
Corporate includes administrative costs of the production, planning and logistics functions which are
allocated to the operating segments in SG&A expenses but are elements of cost of sales in our Consolidated
Statements of Income. Such amounts were $34.3, $47.1 and $59.8 for 2022, 2021 and 2020, respectively.
Also included in corporate are the equity in earnings of affiliates from Armand and ArmaKleen, totaling
$12.3, $9.4 and $6.7 for the three years ended December 31, 2022, 2021 and 2020, respectively.
Liquidity and Capital Resources
On June 16, 2022, we entered into a credit agreement (the “Credit Agreement”) that provides for our
$1,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”) that matures on June 16, 2027,
unless extended. The Credit Agreement replaced our prior $1,000.0 unsecured revolving credit facility maturing
on March 29, 2024 that was entered into on March 29, 2018. We have the ability to increase our borrowing up to
an additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement.
Borrowings under the Credit Agreement are available for general corporate purposes and are used to support our
$1,500.0 commercial paper program.
49
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
As of December 31, 2022, we had $270.3 in cash and cash equivalents, and approximately $1,426.0
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.
On October 31, 2022, we issued $500.0 aggregate principal amount of 5.60% Senior Notes due 2032 (the
“2032 Notes”). The proceeds from the sale of the 2032 Notes were used to repay commercial paper debt incurred
to finance the Hero Acquisition, and related fees and expenses. The 2032 Notes will mature on November 15,
2032, unless earlier retired or redeemed pursuant to the terms of the supplemental indenture governing the terms
of the 2032 Notes.
On June 2, 2022, we issued $500.0 aggregate principal amount of 5.00% Senior Notes due 2052 (the “2052
Notes”). In July 2022 a portion of the proceeds from the sale of the 2052 Notes were used to repay all of our
outstanding $300.0 2.45% Senior Notes due August 1, 2022. The 2052 Notes will mature on June 15, 2052,
unless earlier retired or redeemed pursuant to the terms of the supplemental indenture governing the terms of the
2052 Notes.
In October 2022, we repaid all of the outstanding $400.0 2.875% Senior notes due October 1, 2022 with a
portion of the proceeds from the 2052 Notes and cash on hand.
On December 22, 2021, we entered into a $400.0 unsecured term loan facility (as amended on June 16,
2022, the “Term Loan Facility”) with various banks. The loan under the Term Loan Facility (the “Term Loan”)
was fully drawn at closing. Unless repaid early, the Term Loan is due on December 22, 2024. The interest rate is
the Secured Overnight Financing Rate (“SOFR”) plus a spread and an applicable margin based on the
Company’s credit rating, which can range from 60 basis points to 125 bps. The proceeds of the Term Loan were
used to partially fund the TheraBreath Acquisition, with the remaining proceeds used for the repayment of
commercial paper. In January 2023, we repaid $100.0 of the Term Loan with cash on hand and commercial paper
borrowings.
Additionally, we financed the TheraBreath Acquisition with a portion of the proceeds from an underwritten
public offering of $400.0 aggregate principal amount Senior Notes due 2031 (the “2031 Notes”) completed on
December 10, 2021. The 2031 Notes will mature on December 15, 2031, unless earlier retired or redeemed
pursuant to the terms of the supplemental indenture governing the terms of the 2031 Notes.
We financed the Waterpik Acquisition with a portion of the proceeds from an underwritten public offering
of $1,425.0 aggregate principal amount of Senior Notes completed on July 25, 2017, consisting of $300.0
aggregate principal amount of Floating Rate Senior Notes that were due in 2019 and have been fully repaid,
$300.0 aggregate principal amount of 2.45% Senior Notes that were due in 2022 and have been fully repaid,
$425.0 aggregate principal amount of 3.15% Senior Notes due 2027 and $400.0 aggregate principal amount of
3.95% Senior Notes due 2047.
In 2015, we initiated a Supply Chain Finance program (“SCF Program”). Under the SCF Program,
qualifying suppliers may elect to sell their receivables from us for early payment. Participating suppliers
negotiate their receivables sales arrangements directly with a third party. We are not party to those agreements
and do not have an economic interest in the supplier’s decision to sell their receivables. The SCF Program may
allow suppliers more favorable terms than they could secure on their own. The terms of our payment obligations
are not impacted by a supplier’s participation in the SCF Program. Our payment terms with suppliers are
consistent between suppliers that elect to participate in the SCF Program and those that do not participate. As a
result, the program does not have an impact to our average days outstanding.
50
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
All amounts outstanding to suppliers participating in the SCF Program are recorded within Accounts
Payable in our Consolidated Balance Sheets, and the associated payments are included in operating activities
within our Consolidated Statements of Cash Flows.
The current economic environment presents risks that could have adverse consequences for our liquidity.
See the discussion of this and other risks under “Risk Factors” in Item 1A of this Annual Report. 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 purchase
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 replaces our 2017 Share Repurchase Program. The 2021 Share
Repurchase Program does 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 our incentive plans.
In December 2021, we executed open market purchases of 1.8 million shares for $170.3, inclusive of fees,
of which $100.0 was purchased under the evergreen share repurchase program and $70.3 was purchased under
the 2021 Share Repurchase Program. In December 2021, we also entered into an 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 to us. 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 our
2021 Share Repurchase Program.
As a result of our stock repurchases, there remains $729.7 of share repurchase availability under the 2021
Share Repurchase Program as of December 31, 2022.
On February 1, 2023, the Board declared a 4% increase in the regular quarterly dividend from $0.2625 to
$0.2725 per share, equivalent to an annual dividend of $1.09 per share payable to stockholders of record as of
February 15, 2023. The increase raises the annual dividend payout from $255.0 to approximately $265.0.
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 $250.0 in 2023 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.
51
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
Cash Flow Analysis
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 885.2
$(728.6)
$(120.9)
December 31,
2022
Year Ended
December 31,
2021
$ 993.8
$(682.0)
$(252.1)
December 31,
2020
$ 990.3
$(608.1)
$(360.1)
2022 compared to 2021
Net Cash Provided by Operating Activities – Our primary source of liquidity is our cash flow provided by
operating activities, which is dependent on the level of net income and changes in working capital. Our net cash
provided by operating activities in 2022 decreased by $108.6 to $885.2 as compared to $993.8 in 2021 due to an
increase in working capital and lower cash earnings (net income adjusted for non-cash items). The increase in
working capital is primarily related to higher inventory balances as we increased inventory early in 2022 to
ensure supply and then experienced lower demand for certain products later in the year. We measure working
capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle
information for the quarters ended December 31, 2022 and 2021:
As of
December 31,
2022
December 31,
2021
Change
Days of sales outstanding in accounts receivable (“DSO”)
. . . . . . . . . . . . . .
Days of inventory outstanding (“DIO”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Days of accounts payable outstanding (“DPO”) . . . . . . . . . . . . . . . . . . . . . . .
Cash conversion cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
69
78
19
28
64
78
14
0
5
0
5
Our cash conversion cycle (defined as the sum of DSO plus DIO less DPO) at December 31, 2022, which is
calculated using a two period average method, increased 5 days from the prior year due to an increase in DIO of
5 days from the increase in inventory balances as we increased inventory early in 2022 to ensure supply and then
experienced lower demand for certain products later in the year. We continue to focus on reducing our working
capital requirements.
Net Cash Used in Investing Activities – Net cash used in investing activities during 2022 was $728.6,
primarily reflecting $546.8 for the Hero Acquisition and $178.8 for property, plant and equipment additions. Net
cash used in investing activities during 2021 was $682.0, primarily reflecting $556.0 for the TheraBreath
Acquisition and $118.8 for property, plant and equipment additions.
Net Cash Used in Financing Activities – Net cash used in financing activities during the twelve months of
2022 was $120.9, reflecting $255.0 of cash dividend payments and $12.0 of financing costs, partially offset by
$119.9 of net debt borrowings, and $26.2 of proceeds from stock option exercises. Net cash used in financing
activities during the twelve months of 2021 was $252.1, reflecting $500.0 of repurchases of our Common Stock,
$247.5 of cash dividend payments and $3.9 of financing costs, partially offset by $400.7 of net debt borrowings,
and $98.7 of proceeds from stock option exercises.
52
CHURCH & DWIGHT CO., INC AND SUBSIDIARIES
(Dollars in millions, except share and per share data)
OTHER ITEMS
Market risk
Concentration of Risk
A group of four customers accounted for approximately 42% of consolidated net sales in 2022. A group of
three customers accounted for approximately 37% of consolidated net sales in 2021 and 36% in 2020, of which a
single customer (Walmart Inc. and its affiliates) accounted for approximately 24%, 24% and 23% in 2022, 2021
and 2020, respectively.
Interest Rate Risk
We had outstanding total debt at December 31, 2022, of $2,673.5, net of debt issuance costs, of which
approximately 82% has a fixed weighted average interest rate of 4.1% and the remaining 18% was constituted of
commercial paper issued by us that currently has a weighted average interest rate of approximately 4.0% and the
term loan due 2024 with a current rate of approximately 5.1%. From time to time the Company will enter into
interest rate lock agreements to hedge the risk of changes in the interest payments attributable to changes in the
interest rate associated with anticipated issuances of debt.
Other Market Risks
We are also subject to market risks relating to our diesel and other commodity costs, fluctuations in foreign
currency exchange rates, and changes in the market price of the Common Stock. Refer to Note 3 to the
Consolidated Financial Statements included in this Annual Report for a discussion of these market risks and the
derivatives used to manage the risks associated with changing diesel fuel and other commodity prices, foreign
exchange rates and the price of our Common Stock.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information appears under the heading “Market Risk” in the “Management’s Discussion and Analysis”
section. Refer to page 53 of this Annual Report.
53
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Church & Dwight Co., Inc. (the “Company”) is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management evaluated the Company’s internal control over financial reporting as of December 31, 2022. In
making this assessment, management used the framework established in Internal Control-Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result
of this assessment and based on the criteria in the COSO framework, management has concluded that as of
December 31, 2022, the Company’s internal control over financial reporting was effective.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has audited the
Company’s internal control over financial reporting. Their opinions on the effectiveness of the Company’s
internal control over financial reporting and on the Company’s consolidated financial statements and financial
statement schedule appear on pages 55 and 58 of this Annual Report on Form 10-K.
/s/ Matthew T. Farrell
Matthew T. Farrell
President and Chief Executive Officer
/s/
Richard A. Dierker
Richard A. Dierker
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
February 16, 2023
54
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Church & Dwight Co., Inc.
Ewing, New Jersey
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Church & Dwight Co., Inc. and subsidiaries
(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income,
comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended
December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2022, in conformity with the accounting
principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022,
based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2023, expressed an
unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
55
Tradenames and Other Intangibles, Net – Trojan and Waterpik – Refer to Notes 1 and 7 to the
Consolidated Financial Statements
Critical Audit Matter Description
The Company owns tradenames that are considered to have indefinite lives. These tradenames are required to be
measured periodically for impairment.
The Company’s global Trojan business, specifically the condom category, has not grown and competition has
increased. In addition, higher input costs, discount rates, and supply shortages for packaging materials have
reduced profitability. As a result, the Trojan business has experienced declining sales and profits resulting in a
reduction in expected future cash flows, eroding a portion of the excess between the fair and carrying value of the
tradename. The carrying value of the Trojan tradename is $176.4 million and fair value exceeded the carrying
value by 46% as of December 31, 2022.
The Company’s global Waterpik business has recently experienced a decline in customer demand for many of its
products, primarily due to value-branded competitive products and lower consumer spending on discretionary
products resulting from inflation. As a result, the Waterpik business has experienced declining sales and profits
resulting in a reduction in expected future cash flows, eroding a substantial portion of the excess between the fair
and carrying value of the tradename. The carrying value of the Waterpik tradename is $644.7 million and fair
value exceeded the carrying value by 7% as of December 31, 2022.
Management estimates the fair value of these tradenames on a periodic basis, estimated based on a “relief from
royalty” (Trojan) or “excess earnings” (Waterpik) discounted cash flow method. The determination of the fair
value requires management to make significant estimates and assumptions related to future performance, such as
revenue growth rates (Trojan and Waterpik) and EBITA margin (Waterpik only), as well as the selection of
appropriate valuation assumptions such as the discount rates (Trojan and Waterpik) and royalty rate (Trojan
only). Changes in these assumptions could have a significant impact on the fair value of the tradenames, leading
to an impairment.
Given the significant judgments made by management to estimate the tradenames’ fair value, performing audit
procedures to evaluate the reasonableness of management’s estimates and assumptions related to the revenue
growth rates, EBITA margin, and the selection of the discount rates and royalty rate, involved a high degree of
auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the revenue growth rate, EBITA margin, and the selection of the discount rates
and royalty rate for the tradenames included the following, among others:
• We tested the effectiveness of controls over the account balance, including those over the revenue
growth rates, EBITA margin, and the selection of the discount rates and royalty rate.
• We evaluated management’s ability to accurately forecast revenue growth and EBITA margin by
comparing actual performance to management’s historical forecasts.
• We evaluated the reasonableness of management’s forecasted revenue growth and EBITA margin by
comparing the forecasts to:
– Historical performance.
–
Internal communications to management and the Board of Directors.
– Forecasted information included in analyst and industry reports for the Company and certain of its
peer companies.
56
• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate
and royalty rate by:
– Testing the source information underlying the determination of the discount rates and royalty rate
and the mathematical accuracy of the calculation.
– Developing a range of independent estimates and comparing those to the discount rates and
royalty rate selected by management.
/s/ DELOITTE & TOUCHE LLP
Morristown, NJ
February 16, 2023
We have served as the Company’s auditor since 1968.
57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Church & Dwight Co., Inc.
Ewing, New Jersey
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Church & Dwight Co., Inc. and subsidiaries (the
“Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022,
of the Company and our report dated February 16, 2023, expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
58
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Morristown, NJ
February 16, 2023
59
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Year Ended December 31,
2022
2021
2020
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,375.6
3,125.6
$5,190.1
2,926.6
$4,895.8
2,681.6
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,250.0
535.2
1,117.0
Income from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
597.8
12.3
3.8
(1.0)
(89.6)
523.3
109.4
2,263.5
577.7
606.7
1,079.1
9.4
0.0
(2.3)
(54.5)
1,031.7
204.2
2,214.2
591.2
593.3
1,029.7
6.7
0.5
(2.1)
(61.0)
973.8
187.9
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 413.9
$ 827.5
$ 785.9
Weighted average shares outstanding—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per share—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per share—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
242.9
246.3
1.70
1.68
1.05
$
$
$
244.9
249.6
3.38
3.32
1.01
$
$
$
246.8
252.2
3.18
3.12
0.96
$
$
$
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax:
Foreign exchange translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Defined benefit plan gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from derivative agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2022
2021
2020
$413.9
$827.5
$785.9
(16.2)
2.3
52.8
38.9
(3.8)
(0.6)
13.8
9.4
10.4
0.0
(21.3)
(10.9)
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$452.8
$836.9
$775.0
See Notes to Consolidated Financial Statements.
60
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
Assets
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, less allowances of $3.5 and $5.5 . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, Plant and Equipment, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Investment in Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade Names and Other Intangibles, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, December 31,
2022
2021
$
270.3
422.0
646.6
57.0
1,395.9
761.1
12.7
3,431.6
2,426.8
317.5
$
240.6
405.5
535.4
51.9
1,233.4
652.7
9.1
3,494.3
2,274.5
332.5
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 8,345.6
$ 7,996.5
Liabilities and Stockholders’ Equity
Current Liabilities
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and Other Long-term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Acquisition Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies
Stockholders’ Equity
Preferred Stock, $1.00 par value, Authorized 2,500,000 shares; none issued . . . . . . . .
Common Stock, $1.00 par value, Authorized 600,000,000 shares; 293,709,982 shares
issued as of December 31, 2022 and 292,855,100 shares issued as of
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock in treasury, at cost: 49,814,106 shares as of December 31, 2022 and
$
74.0
0.0
1,102.8
7.0
1,183.8
2,599.5
757.0
273.4
42.0
4,855.7
$
252.8
699.4
1,119.7
3.3
2,075.2
1,610.7
745.1
298.3
34.0
4,763.3
0.0
0.0
293.7
366.2
5,524.6
(29.3)
292.8
310.3
5,366.0
(68.2)
50,309,124 shares as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,665.3)
(2,667.7)
Total Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,489.9
3,233.2
Total Liabilities and Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 8,345.6
$ 7,996.5
See Notes to Consolidated Financial Statements.
61
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In millions)
Cash Flow From Operating Activities
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of business acquisition liabilities . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Flawless impairment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in net earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairment charge and other asset write-offs . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating assets and liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2020
2021
2022
$ 413.9
$ 827.5
$ 785.9
67.0
152.0
0.0
(117.7)
411.0
(12.3)
8.7
32.3
2.4
0.0
(3.2)
(5.3)
(92.8)
2.5
39.9
14.4
(27.6)
68.4
150.7
(98.0)
20.3
0.0
(9.4)
9.4
23.7
14.9
0.0
3.6
2.4
(29.1)
(6.1)
47.5
(16.0)
(16.0)
66.2
123.5
(93.7)
25.7
0.0
(6.7)
7.4
21.5
1.9
(3.0)
2.3
(13.4)
(61.9)
(10.2)
168.0
12.2
(35.4)
Net Cash Provided By Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
885.2
993.8
990.3
Cash Flow From Investing Activities
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(178.8)
0.0
(546.8)
(3.0)
(118.8)
0.0
(556.0)
(7.2)
(98.9)
7.0
(512.7)
(3.5)
Net Cash Used In Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(728.6)
(682.0)
(608.1)
Cash Flow From Financing Activities
Long-term debt borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (repayments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term debt (repayments), net of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of business acquisition liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
998.8
(700.0)
(178.9)
26.2
(255.0)
0.0
0.0
(12.0)
799.2
(300.0)
(98.5)
98.7
(247.5)
(500.0)
0.0
(4.0)
0.0
0.0
99.0
93.0
(237.3)
(300.0)
(14.5)
(0.3)
Net Cash Used In Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(120.9)
(252.1)
(360.1)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . .
(6.0)
(2.2)
Net Change In Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . .
29.7
240.6
57.5
183.1
5.3
27.4
155.7
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 270.3
$ 240.6
$ 183.1
62
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW—(Continued)
(In millions)
Cash paid during the year for:
Interest (net of amounts capitalized) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 86.0
$ 51.8
$ 58.8
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$213.1
$202.8
$162.1
Supplemental disclosure of non-cash investing activities:
Property, plant and equipment expenditures included in Accounts Payable . . . . .
$ 13.7
$ 10.7
$ 20.1
Year Ended December 31,
2020
2021
2022
See Notes to Consolidated Financial Statements.
63
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 2022, 2021 and 2020
(In millions)
Number of Shares
Amounts
Common
Stock
Treasury
Stock
Common
Stock
Additional
Paid-In
Capital
292.8
0.0
(47.4)
0.0
$292.8
0.0
$295.5
0.0
Retained
Earnings
$4,237.4
785.9
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
Church &
Dwight Co.,
Inc.
Stockholders’
Equity
$(66.7)
0.0
$(2,091.2)
0.0
$2,667.8
785.9
0.0
0.0
0.0
0.0
292.8
0.0
0.0
0.0
0.0
0.0
292.8
0.0
0.0
0.0
0.0
0.9
0.0
0.0
(3.1)
3.1
(47.4)
0.0
0.0
0.0
(5.7)
2.8
(50.3)
0.0
0.0
0.0
(0.2)
0.7
0.0
0.0
0.0
0.0
$292.8
0.0
0.0
0.0
0.0
0.0
$292.8
0.0
0.0
0.0
0.0
0.9
0.0
0.0
(30.0)
0.0
(237.3)
0.0
8.9
$274.4
0.0
0.0
$4,786.0
827.5
0.0
0.0
10.0
0.0
(247.5)
0.0
25.9
$310.3
0.0
0.0
$5,366.0
413.9
(10.9)
0.0
0.0
0.0
$(77.6)
0.0
9.4
0.0
0.0
0.0
0.0
0.0
(270.0)
(10.9)
(237.3)
(300.0)
106.0
114.9
$(2,255.2)
0.0
$3,020.4
827.5
0.0
0.0
(510.0)
9.4
(247.5)
(500.0)
97.5
123.4
$(68.2)
0.0
$(2,667.7)
0.0
$3,233.2
413.9
0.0
0.0
20.0
0.0
(255.0)
0.0
38.9
0.0
0.0
0.0
0.0
(20.0)
38.9
(255.0)
0.0
35.9
(0.3)
0.0
22.4
58.9
December 31, 2019 . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . .
Stock purchases . . . . . . . . . . . . . . . . .
Stock based compensation expense
and stock option plan
transactions . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . .
Stock purchases . . . . . . . . . . . . . . . . .
Stock based compensation expense
and stock option plan
transactions . . . . . . . . . . . . . . . . . . .
December 31, 2021 . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . .
Stock purchases . . . . . . . . . . . . . . . . .
Stock based compensation expense
and stock option plan
transactions . . . . . . . . . . . . . . . . . . .
December 31, 2022 . . . . . . . . . . . . . .
293.7
(49.8)
$293.7
$366.2
$5,524.6
$(29.3)
$(2,665.3)
$3,489.9
See Notes to Consolidated Financial Statements.
64
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except share and per share data)
1.
Significant Accounting Policies
Business
The Company, founded in 1846, develops, manufactures and markets a broad range of household, personal
care and specialty products focused on animal productivity, chemicals and cleaners. The Company sells its
consumer products under a variety of brands through a broad distribution platform that includes supermarkets,
mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar, pet and other specialty
stores and websites and other e-commerce channels, all of which sell the products to consumers. The Company
also sells specialty products to industrial customers, livestock producers and through distributors.
Basis of Presentation
The accompanying Consolidated Financial Statements are presented in accordance with accounting
principles generally accepted in the U.S. (“GAAP”) and include the accounts of the Company and its
majority-owned subsidiaries. For equity investments in which the Company does not control or have the ability
to exert significant influence over the investee, which generally is when the Company has less than a 20%
ownership interest, the investments are accounted for under the cost method. In circumstances where the
Company has greater than a 20% ownership interest and has the ability to exercise significant influence over, but
does not control, the investee, the investment is accounted for under the equity method. As a result, the Company
accounts for its 50% interest in its Armand Products Company (“Armand”) joint venture and its 50% interest in
The ArmaKleen Company (“ArmaKleen”) joint venture under the equity method. Armand and ArmaKleen are
specialty chemical businesses. The Company’s equity in earnings of Armand and ArmaKleen are included in the
Corporate segment, as described in Note 16.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent gains and losses at the date of the financial statements and reported amounts of revenue
and expenses during the reporting period. Management makes estimates regarding inventory valuation,
promotional and sales returns reserves, the carrying amount of goodwill and other intangible assets, the
realization of deferred tax assets, tax reserves, business acquisition liabilities, liabilities related to other
postretirement benefit obligations and other matters that affect the reported amounts and other disclosures in the
financial statements. These estimates are based on judgment and available information. Actual results could
differ materially from those estimates, and it is possible that changes in such estimates could occur in the near
term.
Revenue Recognition
Revenue is recognized when control of a promised good is transferred to a customer in an amount that
reflects the consideration that the Company expects to be entitled to in exchange for that good. This usually
occurs when finished goods are delivered to the Company’s customers or when finished goods are picked up by a
customer or a customer’s carrier.
a. Nature of Goods and Services
The Company primarily ships finished goods to its customers and operates in three segments: Consumer
Domestic, Consumer International and Specialty Products Division (“SPD”). The segments are based on
65
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
differences in the nature of products and organizational and ownership structures. The Consumer Domestic and
Consumer International segments market a variety of personal care and household products and over-the-counter
products, including but not limited to baking soda, cat litter, laundry detergent, condoms, stain removers, hair
removal, gummy dietary supplements, dry shampoo, oral care, cold remedy, acne treatment, water flossers and
showerheads. The SPD segment focuses on sales to businesses and participates in three product areas: Animal
and Food Production, Specialty Chemicals and Specialty Cleaners. The Company’s products are distinct and
separately identifiable on customer contracts or invoices, with each product sale representing a separate
performance obligation.
The Company sells consumer products under a variety of brands through a broad distribution platform that
includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar,
pet and other specialty stores and websites and other e-commerce channels, all of which sell its products to
consumers. The Company sells its specialty products to industrial customers, livestock producers and through
distributors.
Refer to Note 17 for disaggregated revenue information with respect to each of the Company’s segments.
b. When Performance Obligations are Satisfied
For performance obligations related to the shipping and invoicing of products, control transfers at the point
in time upon which finished goods are delivered to the Company’s customers or when finished goods are picked
up by a customer or a customer’s carrier. Once a product has been delivered or picked up by the customer, the
customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The
Company considers control to have transferred upon delivery or customer receipt because the Company has an
enforceable right to payment at that time, the customer has legal title to the asset, the Company has transferred
physical possession of the asset, and the customer has significant risk and rewards of ownership of the asset.
c. Variable Consideration
The Company conducts extensive promotional activities, primarily through the use of off-list discounts,
slotting, coupons, cooperative advertising, periodic price reduction arrangements, and end-aisle and other in-store
displays. The costs of such activities are netted against sales and are recorded when the related sale takes place.
The reserves for sales returns and consumer and trade promotion liabilities are established based on the
Company’s best estimate of the amounts necessary to settle future and existing obligations for products sold as of
the balance sheet date. The Company uses historical trend experience and coupon redemption inputs in arriving
at coupon reserve requirements, and uses forecasted appropriations, customer and sales organization inputs, and
historical trend analysis in determining the reserves for other promotional activities and sales returns.
d. Practical Expedients
The Company expenses incremental direct costs of obtaining a contract (broker commissions) when the
related sale takes place. These costs are recorded in SG&A expenses in the accompanying consolidated
statements of income.
The Company accounts for shipping and handling costs as fulfillment activities which are therefore
recognized upon shipment of the goods.
66
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The Company has applied the portfolio approach to all open contracts as they have similar characteristics
and can reasonably expect that the effects on the financial statements of applying this new guidance to the
portfolio of contracts would not differ materially from applying this guidance to the individual contracts within
the portfolio.
The Company excludes from its revenue any amounts collected from customers for sales (and similar) taxes.
Sales of Accounts Receivable
The Company entered into a factoring agreement with a financial institution to sell certain customer
receivables at discounted rates in 2015. Transactions under this agreement are accounted for as sales of accounts
receivable and are removed from the Consolidated Balance Sheet at the time of the sales transaction. As the
customers associated with the Company’s factoring program have been consistent in recent years, the sales
performance by customer has driven the amount factored each year. The total amount factored in each year was
$211.2, $181.2, and $160.0 during the years ended December 31, 2022, 2021 and 2020, respectively.
Cost of Sales, Marketing and Selling, General and Administrative Expenses
Cost of sales include costs related to the manufacture and distribution of the Company’s products, including
raw material, inbound freight, import duties and tariffs, direct labor (including employee compensation benefits)
and indirect plant costs such as plant supervision, receiving, inspection, maintenance labor and materials,
depreciation, taxes and insurance, purchasing, production planning, operations management, logistics, freight to
customers, warehousing costs, internal transfer freight costs and plant impairment charges.
Marketing expenses include costs for advertising (excluding the costs of cooperative advertising programs,
which are reflected in net sales), costs for coupon insertion (mainly the cost of printing and distribution),
consumer promotion costs (such as on-shelf advertisements and floor ads), public relations, package design
expense and market research costs.
Selling, general and administrative expenses (“SG&A”) expenses include, among others, costs related to
functions such as sales, corporate management, research and development, marketing administration, information
technology and legal. Such costs include salary compensation related costs (such as benefits, incentive
compensation and profit sharing), stock option costs, depreciation, travel and entertainment related expenses,
professional and other consulting fees and amortization of intangible assets.
Foreign Currency Translation
Unrealized gains and losses related to currency translation are recorded in Accumulated Other
Comprehensive Income (Loss). Gains and losses on foreign currency transactions are recorded in the
Consolidated Statements of Income.
Cash Equivalents
Cash equivalents consist of highly liquid short-term investments and term bank deposits, which mature
within three months of their original maturity date.
Inventories
Inventories are valued at the lower of cost or market (net realizable value, which reflects any costs to sell or
dispose). The Company identifies any slow moving, obsolete or excess inventory to determine whether an
67
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
adjustment is required to establish a new carrying value. The determination of whether inventory items are slow
moving, obsolete or in excess of needs requires estimates and assumptions about the future demand for the
Company’s products, technological changes, and new product introductions. Estimates as to the future demand
used in the valuation of inventory involve judgments regarding the ongoing success of the Company’s products.
The Company evaluates its inventory levels and expected usage on a periodic basis and records adjustments as
required. Adjustments to reflect inventory at net realizable value were $46.0 at December 31, 2022, and $36.2 at
December 31, 2021.
Property, Plant and Equipment
Property, Plant and Equipment (“PP&E”) are stated at cost. Depreciation is recorded using the straight-line
method over the estimated useful lives of the respective assets. Estimated useful lives for building and
improvements, machinery and equipment, and office equipment range from 9-40, 3-20 and 3-10 years,
respectively. Routine repairs and maintenance are expensed when incurred. Leasehold improvements are
depreciated over a period no longer than the respective lease term, except where a lease renewal has been
determined to be reasonably assured and failure to renew the lease results in a significant penalty to the
Company.
PP&E is reviewed annually and whenever events or changes in circumstances indicate that possible
impairment exists. The Company’s impairment review is based on an undiscounted cash flow analysis at the
lowest level at which cash flows of the long-lived assets are largely independent of other groups of Company
assets and liabilities. The analysis requires management judgment with respect to changes in technology, the
continued success of product lines, and future volume, revenue and expense growth rates. The Company
conducts annual reviews to identify idle and underutilized equipment, and reviews business plans for possible
impairment. An indication of impairment occurs when the carrying value of the asset exceeds the future
undiscounted cash flows. When an impairment is indicated, the estimated future cash flows are then discounted
to determine the estimated fair value of the asset and an impairment charge is recorded for the difference between
the carrying value and the net present value of estimated future cash flows.
Software
The Company capitalizes certain costs of developing computer software. Amortization is recorded using the
straight-line method over the estimated useful life of the software, which is estimated to be no longer than 10
years.
Fair Value of Financial Instruments
Certain financial instruments are required to be recorded at fair value. The estimated fair values of such
financial instruments (including investment securities and other derivatives) have been determined using market
information and generally accepted valuation methodologies. Changes in assumptions or estimation methods
could affect the fair value estimates. Other financial instruments, including cash equivalents and short-term debt,
are recorded at cost, which approximates fair value. Additional information regarding the Company’s risk
management activities, including derivative instruments and hedging activities, are separately disclosed. See
Notes 2 and 3.
Goodwill and Other Intangible Assets
The Company has intangible assets of substantial value on its consolidated balance sheet. These intangible
assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill. The
68
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Company determines whether an intangible asset (other than goodwill) has a useful life based on multiple
factors, including how long the Company intends to generate cash flows from the asset.
Carrying values of goodwill and indefinite-lived trade names are reviewed periodically for possible
impairment. The Company’s impairment analysis is based on a discounted cash flow approach that requires
significant judgment with respect to unit volume, revenue and expense growth rates, and the selection of an
appropriate discount rate and royalty rate. Management uses estimates based on expected trends in making these
assumptions. With respect to goodwill, impairment occurs when the carrying value of the reporting unit exceeds
the discounted present value of cash flows for that reporting unit. For trade names and other intangible assets, an
impairment charge is recorded for the difference between the carrying value and the net present value of
estimated future cash flows, which represents the estimated fair value of the asset. Judgment is required in
assessing whether assets may have become impaired between annual valuations. Indicators such as unexpected
adverse economic factors, unanticipated technological change, distribution losses, or competitive activities and
acts by governments and courts may indicate that an asset has become impaired. Intangible assets with finite
lives are amortized over their estimated useful lives, which range from 3-20 years, using the straight-line method,
and reviewed for impairment when changes in market circumstances occur.
It is possible that the Company’s conclusions regarding impairment or recoverability of goodwill or other
intangible assets could change in future periods if, for example, (i) the businesses or brands do not perform as
projected, (ii) overall economic conditions in future years vary from current assumptions (including changes in
discount rates), (iii) business conditions or strategies change from current assumptions, (iv) investors require
higher rates of return on equity investments in the marketplace or (v) enterprise values of comparable publicly
traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower
multiples of revenues and EBITDA.
Research and Development
The Company incurred research and development expenses in the amount of $110.0, $105.2 and $102.6 in
2022, 2021 and 2020, respectively. These expenses are included in SG&A expenses and are expensed as
incurred.
Earnings Per Share (“EPS”)
Basic EPS is calculated based on income available to holders of the Company’s common stock (“Common
Stock”) and the weighted-average number of shares outstanding during the reported period. Diluted EPS includes
additional dilution from potential Common Stock issuable pursuant to the exercise of outstanding stock options.
The following table sets forth a reconciliation of the weighted-average number of shares of Common Stock
outstanding to the weighted-average number of shares outstanding on a diluted basis:
Weighted average common shares outstanding— basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
242.9
244.9
246.8
Dilutive effect of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4
4.7
5.4
Weighted average common shares outstanding—diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
246.3
249.6
252.2
Antidilutive stock options outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0
1.6
1.5
2022
2021
2020
69
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Employee and Director Stock Based Compensation
The fair value of share-based compensation is determined at the grant date and the related expense is
recognized over the required employee service period in which the share-based compensation vests. The
following table presents the pre-tax expense associated with the fair value of unvested stock options and
restricted stock awards included in SG&A expenses and in cost of sales:
For the Year Ended
December 31,
2022
2021
2020
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2.5
$ 3.3
$ 3.6
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.1
22.3
21.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$32.6
$25.6
$24.6
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized to reflect the future tax consequences attributable to the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which the differences are expected to be recovered or settled. Management
provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely
than not” to be realized. The Company records liabilities for potential assessments in various tax jurisdictions in
accordance with GAAP. The liabilities relate to tax return positions that, although supportable by the Company,
may be challenged by the tax authorities and do not meet the minimum recognition threshold required under
applicable accounting guidance for the related tax benefit to be recognized in the income statement. The
Company adjusts this liability as a result of changes in tax legislation, interpretations of laws by courts, rulings
by tax authorities, changes in estimates and the expiration of the statute of limitations. Many of the judgments
involved in adjusting the liability involve assumptions and estimates that are highly uncertain and subject to
change. In this regard, settlement of any issue with, or an adverse determination in litigation against, a taxing
authority could require the use of cash and result in an increase in the Company’s annual tax rate. Conversely,
favorable resolution of an issue with a taxing authority would be recognized as a reduction to the Company’s
annual tax rate.
Recently Adopted Accounting Pronouncements
In March 2020, the FASB issued new accounting guidance intended to provide temporary optional
expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease
the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate
(“LIBOR”) and other interbank offered rates to alternative reference rates. This guidance was effective beginning
on March 12, 2020, and the Company may apply the amendments prospectively. In December 2022, the FASB
issued new accounting guidance that deferred the expiration date to December 31, 2024. The adoption of this
guidance did not have an impact on the Company’s consolidated financial position, results of operations or cash
flows in the current period.
70
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Recent Accounting Pronouncements Not Yet Adopted
In September 2022, the FASB issued new accounting guidance intended to add certain qualitative and
quantitative disclosure requirements for a buyer in a supplier finance program. The amendments require a buyer
that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet
presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated
rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim
periods. The amendments are effective for all entities for fiscal years beginning after December 15, 2022 on a
retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose
rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The
Company is currently evaluating the impact of adoption, which is expected to result in additional disclosures in
2023 if material.
There have been no other accounting pronouncements issued but not yet adopted by the Company which are
expected to have a material impact on the Company’s consolidated financial position, results of operations or
cash flows.
2. Fair Value Measurements
Fair Value Hierarchy
Accounting guidance on fair value measurements and disclosures establishes a hierarchy that prioritizes the
inputs used to measure fair value (generally, assumptions that market participants would use in pricing an asset
or liability) based on the quality and reliability of the information provided by the inputs, as follows:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
Fair Values of Other Financial Instruments
The following table presents the carrying amounts and estimated fair values of the Company’s other
financial instruments at December 31, 2022 and 2021:
December 31, 2022
December 31, 2021
Input
Level
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Financial Assets:
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Level 1
$153.9
$153.9
$ 17.1
$ 17.1
Financial Liabilities:
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Level 2
2.45% Senior notes due August 1, 2022 . . . . . . . . . . . . . . . Level 2
2.875% Senior notes due October 1, 2022 . . . . . . . . . . . . . Level 2
Term loan due December 22, 2024 . . . . . . . . . . . . . . . . . . . Level 2
3.15% Senior notes due August 1, 2027 . . . . . . . . . . . . . . . Level 2
2.3% Senior notes due December 15, 2031 . . . . . . . . . . . . . Level 2
5.6% Senior notes due November 15, 2032 . . . . . . . . . . . . Level 2
3.95% Senior notes due August 1, 2047 . . . . . . . . . . . . . . . Level 2
5.0% Senior notes due June 15, 2052 . . . . . . . . . . . . . . . . . Level 2
Interest Rate Swap Lock Agreement liability . . . . . . . . . . . Level 2
74.0
0.0
0.0
400.0
424.8
399.3
499.1
397.6
499.7
0.0
74.0
0.0
0.0
400.0
397.3
321.3
518.9
316.7
464.7
0.0
252.8
300.0
399.9
400.0
424.7
399.2
0.0
397.5
0.0
41.6
252.8
302.9
406.4
400.0
450.1
403.5
0.0
471.6
0.0
41.6
71
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The Company recognizes transfers between input levels as of the actual date of the event. There were no
transfers between input levels during the twelve months ended December 31, 2022.
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments reflected in the Consolidated Balance Sheets:
Cash Equivalents: Cash equivalents consist of highly liquid short-term investments and term bank deposits,
which mature within three months. The estimated fair value of the Company’s cash equivalents approximates
their carrying value.
Short-Term Borrowings: The carrying amounts of the Company’s unsecured lines of credit and commercial
paper issuances approximates fair value because of their short maturities and variable interest rates.
Senior Notes: The Company determines the fair value of its senior notes based on their quoted market value
or broker quotes, when possible. In the absence of observable market quotes, the notes are valued using
non-binding market consensus prices that the Company seeks to corroborate with observable market data.
Interest Rate Lock Agreements
From time to time the Company will enter into interest rate lock agreements to hedge the risk of changes in
the interest payments attributable to changes in the interest rates associated with anticipated issuances of debt.
See Note 3—Derivative Instruments and Risk Management for further details.
Other: The carrying amounts of accounts receivable, and accounts payable and accrued expenses,
approximated estimated fair values as of December 31, 2022 and 2021.
3. Derivative Instruments and Risk Management
Changes in interest rates, foreign exchange rates, the price of the Common Stock and commodity prices
expose the Company to market risk. The Company manages these risks by the use of derivative instruments, such
as cash flow and fair value hedges, diesel and commodity hedge contracts, equity derivatives and foreign
exchange forward contracts. The Company does not use derivatives for trading or speculative purposes.
The Company formally designates and documents qualifying instruments as hedges of underlying exposures
when it enters into derivative arrangements. Changes in the fair value of derivatives designated as hedges and
qualifying for hedge accounting are recorded in other comprehensive income and reclassified into earnings
during the period in which the hedged exposure affects earnings. The Company reviews the effectiveness of its
hedging instruments on a quarterly basis. If the Company determines that a derivative instrument is no longer
effective in offsetting changes in fair values or cash flows, it recognizes the hedge ineffectiveness in current
period earnings and discontinues hedge accounting with respect to the derivative instrument. Changes in the fair
value of derivatives not designated as hedges or those not qualifying for hedge accounting are recognized in
current period earnings. Upon termination of cash flow hedges, the Company reclassifies gains and losses from
accumulated other comprehensive income based on the timing of the underlying cash flows, unless the
termination results from the failure of the intended transaction to occur in the expected timeframe. Such untimely
transactions require immediate recognition in earnings of gains and losses previously recorded in other
comprehensive income.
During 2022 and 2021, the Company used derivative instruments to mitigate risk, some of which were
designated as hedging instruments. The tables following the discussion of the derivative instruments below
72
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
summarize the fair value of the Company’s derivative instruments and the effect of derivative instruments on the
Company’s consolidated Statements of Income and on other comprehensive income.
Derivatives Designated as Hedging Instruments
Diesel Fuel Hedges
The Company uses independent freight carriers to deliver its products. These carriers currently charge the
Company a basic rate per mile for diesel fuel price increases. The Company has entered into hedge agreements
with counterparties to mitigate the volatility of diesel fuel prices, and not to speculate in the future price of diesel
fuel. Under the hedge agreements, the Company agreed to pay a fixed price per gallon of diesel fuel determined
at the time the agreements were executed and to receive a floating rate payment that is determined on a monthly
basis based on the average price of the Department of Energy’s Diesel Fuel Index during the applicable month
and is designed to offset any increase or decrease in fuel costs that the Company pays to it common carriers. The
agreements covered approximately 50.0% of the Company’s 2022 diesel fuel requirements. These diesel fuel
hedge agreements qualified for hedge accounting. Therefore, changes in the fair value of such agreements are
recorded under Accumulated Other Comprehensive Income (Loss) on the Consolidated Balance Sheet.
Foreign Currency
The Company is subject to exposure from fluctuations in foreign currency exchange rates, primarily U.S.
Dollar/Euro, U.S. Dollar/ Pound, U.S. Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, U.S Dollar/Chinese
Yuan and U.S. Dollar/Australian Dollar.
The Company enters into forward exchange contracts to reduce the impact of foreign exchange rate
fluctuations related to anticipated but not yet committed sales or purchases denominated in U.S. Dollar, Canadian
Dollar, Pound, Euro, Mexican Peso, Chinese Yuan, and Australian Dollar. The Company entered into forward
exchange contracts to hedge itself from the risk that, due to fluctuations in currency exchange rates, it would be
adversely affected by net cash outflows. The face value of the unexpired contracts as of December 31, 2022
totaled $233.1 in U.S. Dollars, of which $231.5 qualifies as foreign currency cash flow hedges and, therefore,
changes in the fair value of the contracts are recorded in Accumulated Other Comprehensive Income (Loss) and
reclassified to earnings when the hedged transaction affected earnings.
Interest Rate Lock Agreements
From time to time the Company will enter into interest rate lock agreements to hedge the risk of changes in
the interest payments attributable to changes in the interest rates associated with anticipated issuances of debt.
The interest rate lock agreements outstanding at December 31, 2021 were settled in the second quarter of 2022
for a loss of $4.2. The Company entered into additional interest rate lock agreements in the third quarter of 2022
which were settled in the fourth quarter of 2022 for a gain of $21.9. These agreements were used to hedge the
interest rate risk associated with the first ten years of semi-annual interest payments associated with the Senior
Notes due in 2052 and 2032, respectively, and will each be amortized over a ten-year period. There were no
interest rate lock agreements outstanding as of December 31, 2022. The net gain on the settlement of these
interest rate lock agreements was included in Accumulated Other Comprehensive Income (“AOCI”).
Commodity Hedges
The Company is subject to exposure due to changes in prices of commodities used in production. To limit
the effects of fluctuations in the future market price paid and related volatility in cash flows, the Company enters
73
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
into commodity forward swap contracts. These hedges are designated as cash flow hedges for accounting
purposes and, therefore, changes in the fair value of the contracts are recorded in Accumulated Other
Comprehensive Income (Loss) and reclassified to earnings when the hedged transaction affected earnings. The
fair value of these commodity hedge agreements is reflected in the Consolidated Balance Sheet within Other
Current Assets and Accounts Payable and Accrued Expenses.
Derivatives not Designated as Hedging Instruments
Equity Derivatives
The Company has entered into equity derivative contracts covering its Common Stock in order to minimize
its liability under its Executive Deferred Compensation Plan resulting from changes in the quoted fair values of
its Common Stock to participants who have investments under the Plan in a notional Common Stock fund. The
contracts are settled in cash. Since the equity derivatives contracts do not qualify for hedge accounting, the
Company is required to mark such contracts to market throughout the contract term and record changes in fair
value in the consolidated Statements of Income.
The notional amount of a derivative instrument is the nominal or face amount used to calculate payments
made on that instrument. Notional amounts are presented in the following table:
Notional
Amount
Notional
Amount
December 31,
2022
December 31,
2021
Derivatives designated as hedging instruments
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap lock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diesel fuel contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodities contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
231.5
0.0
5.0 gallons
26.8 pounds
$
$
216.3
300.0
0.0 gallons
72.1 pounds
Derivatives not designated as hedging instruments
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1.6
22.5
$
$
5.9
28.9
Excluding the interest rate lock agreements disclosed above, the fair values and amount of gain (loss)
recognized in income and other comprehensive income associated with the derivative instruments disclosed
above do not have a material impact on the Company’s consolidated financial statements for the periods ended
December 31, 2022, 2021, and 2020.
4.
Inventories
Inventories consist of the following:
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2022
December 31,
2021
$149.5
46.8
450.3
$646.6
$116.2
40.0
379.2
$535.4
74
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
5. Property, Plant and Equipment, Net (“PP&E”)
PP&E consist of the following:
December 31,
2022
December 31,
2021
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office equipment and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
28.1
299.1
856.5
109.1
96.9
211.5
$
28.3
290.8
828.9
107.8
92.7
104.3
Gross PP&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,601.2
840.1
1,452.8
800.1
Net PP&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 761.1
$ 652.7
For the Year Ended December 31,
2022
2021
2020
Depreciation expense on PP&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$67.0
$68.4
$66.2
6. Acquisitions
On October 13, 2022, the Company acquired all of the issued and outstanding shares of capital stock of
Hero Cosmetics, Inc. (“Hero”), the developer of the HERO® brand which includes the MIGHTY PATCH® acne
treatment products (the “Hero Acquisition”). The Company paid $546.8, net of cash acquired, at closing, and
deferred an additional cash payment of $8.0 for five years to satisfy certain indemnification obligations, if
necessary. The Company also issued $61.5 of restricted stock which will be recognized as compensation expense
as the vesting requirements for individuals who received the restricted stock and will continue to be employed by
the Company are satisfied. The vesting requirements are satisfied at various dates over a three-year period from
the date of the acquisition. Hero’s annual net sales for the year ended December 31, 2022 were approximately
$179.0. The Hero Acquisition was financed with cash on hand and commercial paper borrowings and is managed
in the Consumer Domestic segment.
The preliminary fair values of the net assets at acquisition are set forth as follows:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and Other Long-term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business acquisition liabilities—long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 19.5
25.4
1.2
0.4
400.0
71.9
156.1
(1.1)
(1.4)
(117.2)
(8.0)
Cash purchase price (net of cash acquired) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 546.8
75
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The trade name and other intangible assets were valued using a discounted cash flow model. The trade name
and other intangible assets recognized from the Hero Acquisition have useful lives which range from 10—20
years. The goodwill is a result of expected synergies from combined operations of the acquired business and the
Company. Pro forma results are not presented because the impact of the acquisition is not material to the
Company’s consolidated financial results. The goodwill and other intangible assets associated with the Hero
Acquisition are not deductible for U.S. tax purposes.
On December 24, 2021, the Company 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 business (the
“TheraBreath Acquisition”). The Company paid $556.0, net of cash acquired, at closing and deferred an
additional cash payment of $14.0 related to certain indemnity obligations provided by the seller. The additional
amount, to the extent not used in satisfaction of such indemnity obligations, is payable in installments between
two and four years from the closing. THERABREATH’s annual net sales for the year ended December 31, 2021
were approximately $100. The acquisition was financed by the proceeds from a $400.0 three-year term loan and
the Company’s underwritten public offering of $400.0 aggregate principal Senior Notes due on December 15,
2031 (as defined in Note 10) completed on December 10, 2021. The THERABREATH business is managed in
the Consumer Domestic and Consumer International segments.
The fair values of the net assets at acquisition are set forth as follows:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business acquisition liabilities—long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 11.3
12.9
487.0
30.1
43.7
(15.0)
(14.0)
Cash purchase price (net of cash acquired) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$556.0
The trade names and other intangible assets were valued using a discounted cash flow model. The trade
name has an indefinite life. The life of the other intangible assets recognized from the TheraBreath Acquisition
have useful lives which range from 10—20 years. The goodwill is a result of expected synergies from combined
operations of the acquired business and the Company. Pro forma results are not presented because the impact of
the acquisition is not material to the Company’s consolidated financial results. The goodwill and other intangible
assets associated with the TheraBreath Acquisition are deductible for U.S. tax purposes.
On December 1, 2020, the Company acquired all of the outstanding equity of Consumer Health Holdco
LLC, the owner of the ZICAM® brand and cold remedy products business (the “Zicam Acquisition”). The
Company paid $512.7, net of cash acquired, at closing and deferred an additional cash payment of $20.0 related
to certain indemnifications provided by the seller. The deferred amount is recorded in Business Acquisition
Liabilities on the consolidated balance sheet and any amount that may be due for the business acquisition liability
is payable five years from the closing. Zicam’s annual net sales for the year ended December 31, 2020 were
approximately $107.0. The acquisition was financed by the Company with a combination of cash on hand and
short-term borrowings. The ZICAM business is managed in the Consumer Domestic segment.
76
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The fair values of the net assets acquired are set forth as follows:
Inventory and other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash purchase price (net of cash acquired)
$ 40.2
0.5
367.8
93.8
152.2
(13.1)
(108.0)
(20.7)
$ 512.7
The trade names and other intangible assets were valued using a discounted cash flow model. The trade
name and other intangible assets recognized from the Zicam Acquisition have a useful life which ranges from
10—20 years. The goodwill is a result of expected synergies from combined operations of the acquired business
and the Company. Pro forma results are not presented because the impact of the acquisition is not material to the
Company’s consolidated financial results. The goodwill and other intangible assets associated with the Zicam
Acquisition are not deductible for U.S. tax purposes.
7. Goodwill and Other Intangibles, Net
The Company has intangible assets of substantial value on its consolidated balance sheet. These intangible
assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill. The
Company determines whether an intangible asset (other than goodwill) has a useful life based on multiple
factors, including how long the Company intends to generate cash flows from the asset. These intangible assets
are more fully explained in the following sections.
Intangible Assets With a Useful Life
The following table provides information related to the carrying value of amortizable intangible assets:
December 31, 2022
December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization Impairments
Net
Amortization
Period
(Years)
Gross
Carrying
Amount
Accumulated
Amortization Impairments
Net
Amortizable intangible assets:
Trade names . . . . . . . . . . . . $1,785.8
723.4
Customer Relationships . . .
251.7
Patents/Formulas . . . . . . . .
$(406.2)
(358.9)
(114.6)
$(319.0) $1,060.6
305.2
104.4
(59.3)
(32.7)
3-20
15-20
4-20
$1,403.7
666.0
239.1
$(342.8)
(323.5)
(99.4)
$(10.4) $1,050.5
341.6
139.7
(0.9)
0.0
Total . . . . . . . . . . . . . . . . . . $2,760.9
$(879.7)
$(411.0) $1,470.2
$2,308.8
$(765.7)
$(11.3) $1,531.8
Intangible amortization expense amounted to $122.4 for 2022, $120.3 for 2021 and $99.9 for 2020,
respectively. The Company estimates that intangible amortization expense will be approximately $124.0 in 2023
and approximately $123.0 to $94.0 annually over the next five years.
In the fourth quarter of 2022, the Company determined that a review of our ability to recover the carrying
values of the global FINISHING TOUCH FLAWLESS intangible assets was necessary based on the
discontinuance of certain products at a major retailer. The FINISHING TOUCH FLAWLESS assets consist of
77
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
the definite-lived tradename, customer relationships and technology assets recorded at acquisition. The Company
evaluated our ability to recover the intangible assets by comparing the carrying amount to the future
undiscounted cash flows and determined that the cash flows would not be sufficient to recover the carrying value
of the assets. After determining the estimated fair value of the assets, which included a reduction in cash flows
due to the loss of distribution mentioned above along with an expected continued decline in discretionary
consumption and higher interest rates, a non-cash impairment charge of $411.0 was recorded in the fourth quarter
of 2022. The impairment charge is included in SG&A with $349.3 recorded in the Consumer Domestic segment
and $61.7 recorded in the Consumer International segment. The impairment charge was applied as a full
impairment of the customer relationship and technology assets and a partial impairment of the tradename. The
remaining net book value of the tradename as of December 31, 2022 is $46.3 and will be amortized over a
remaining useful life of three years. The estimated fair value of the intangible assets was determined using the
income approach with Level 3 inputs. The Level 3 inputs include the discount rate of 8.5% applied to
management’s estimates of future cash flows based on projections of revenue, gross margin, marketing expense
and tax rates considering the loss of product distribution and the reduction in customer demand that FINISHING
TOUCH FLAWLESS has been experiencing through December 31, 2022. The Company is implementing
strategies to address the decline in profitability. However, if unsuccessful, a further decline could trigger a future
impairment charge.
The Company’s Passport Food Safety business has experienced sales and profit declines due to decreased
demand driven by the COVID-19 pandemic and pressures from new competitive activities resulting from the loss
of exclusivity on a key product line. In the fourth quarter of 2021, management’s review of the outlook for the
Passport business indicated an assessment of our ability to recover the carrying values of the long-lived assets
associated with the business was necessary. That review determined that the estimated future cash flows would
not be sufficient to recover the carrying value of the assets resulting in an impairment of the associated
tradename and other intangible assets of $11.3 in the fourth quarter of 2021. The charge was recorded in SG&A.
The assets have a current net book value of $8.2 and are being amortized over their remaining weighted average
life of 6 years. The Company is implementing strategies to address the decline in profitability. However, if
unsuccessful, a further decline could trigger a future impairment charge.
Indefinite-Lived Intangible Assets
The following table presents the carrying value of indefinite lived intangible assets:
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,961.4
$1,962.5
December 31,
2022
December 31,
2021
The Company’s indefinite lived intangible impairment review is completed in the fourth quarter of each
year.
Fair value for indefinite lived intangible assets was estimated based on a “relief from royalty” or “excess
earnings” discounted cash flow method, which contains numerous variables that are subject to change as business
conditions change, and therefore could impact fair values in the future. The key assumptions used in determining
fair value are sales growth, profitability margins, tax rates, discount rates and royalty rates. The Company
determined that the fair value of all indefinite lived intangible assets for each of the years in the three-year period
ended December 31, 2022 exceeded their respective carrying values based upon the forecasted cash flows and
profitability.
78
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The Company determined that the carrying values of its indefinite lived trade names as of December 31,
2022 and 2021, were recoverable based upon the forecasted cash flows and profitability of the brands.
In recent years the Company’s global TROJAN® business, specifically the condom category, has not grown
and competition has increased. In addition, profitability was negatively impacted by inflation throughout 2022,
resulting in higher input costs and discount rates, and supply shortages for packaging materials. As a result, the
TROJAN business has experienced declining sales and profits resulting in a reduction in expected future cash
flows which have 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 and a continued decline in fair value could
trigger a future impairment charge of the TROJAN tradename. The carrying value of the TROJAN tradename is
$176.4 and fair value exceeded carrying value by 46% as of October 1, 2022. The key assumptions used in the
projections from the Company’s October 1, 2022 impairment analysis include discount rates of 8.0% in the U.S.
and 9.5% internationally, revenue assumptions including management’s estimates of the success of new product
launches and improvement in the supply chain, and an average royalty rate of approximately 10%. While
management has implemented strategies to address the risk, including lowering 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.
The Company’s global WATERPIK business has recently experienced a significant decline in customer
demand for many of its products, primarily due to lower consumer spending for discretionary products from
inflation and a growing number of water flosser consumers switching to more value-branded products. As a
result, the WATERPIK business has experienced declining sales and profits resulting in a reduction in expected
future cash flows which have eroded a substantial portion of the excess between the fair and carrying value of the
tradename. This indefinite-lived intangible asset may be susceptible to impairment and a continued decline in fair
value could trigger a future impairment charge of the WATERPIK tradename. The carrying value of the
WATERPIK tradename is $644.7 and fair value exceeded carrying value by 7% as of October 1, 2022. The key
assumptions used in the projections from the Company’s October 1, 2022 impairment analysis include a discount
rate of 8.4%, revenue growth rates between 0% and 6% and EBITA margins between 18% and 21%. These
assumptions are based on current market conditions, recent trends and management’s expectation of the success
of initiatives to lower costs (including tariffs) and to develop lower-cost water flosser alternatives as well as
improvement in the supply chain. While management has implemented strategies to address the risk, significant
changes in operating plans or adverse changes in the future could reduce the underlying cash flows used to
estimate fair value.
79
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 are as
follows:
Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
TheraBreath acquired goodwill
Tax related and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TheraBreath adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hero acquired goodwill
Consumer
Domestic
Consumer
International
Specialty
Products
$1,859.3
39.3
1.2
$1,899.8
0.5
156.1
$234.3
4.4
0.0
$238.7
(4.3)
0.0
$136.0
0.0
0.0
$136.0
0.0
0.0
Total
$2,229.6
43.7
1.2
$2,274.5
(3.8)
156.1
Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,056.4
$234.4
$136.0
$2,426.8
The result of the Company’s annual goodwill impairment test, performed in the beginning of the second
quarter of 2022, determined that the estimated fair value substantially exceeded the carrying values of all
reporting units. The determination of fair value contains numerous variables that are subject to change as
business conditions change and therefore could impact fair value in the future.
8. Leases
The Company leases certain manufacturing facilities, warehouses, office space, railcars and equipment.
Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet. All
recorded leases are classified as operating leases and lease expense is recognized on a straight-line basis over the
lease term. For leases beginning in 2019, lease components (base rental costs) are accounted for separately from
the nonlease components (e.g., common-area maintenance costs). For leases that do not provide an implicit rate,
the Company uses its estimated secured incremental borrowing rate based on the information available at
commencement date in determining the present value of lease payments.
A summary of the Company’s lease information is as follows:
Classification
December 31,
2022
December 31,
2021
Assets
Right of use assets . . . . . . . . . . . . . . . . . . . . Other Assets
Liabilities
Current lease liabilities . . . . . . . . . . . . . . . . . Accounts Payable and Accrued Expenses
Long-term lease liabilities . . . . . . . . . . . . . . Deferred and Other Long-term Liabilities
Total lease liabilities . . . . . . . . . . . . . . . . . .
Other information
Weighted-average remaining lease term
(years) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . .
$162.6
$159.4
$ 21.9
151.9
$173.8
$ 24.4
146.6
$171.0
8.9
4.4%
9.1
4.3%
80
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Statement of Income
Lease cost(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$31.0
$32.7
$27.7
Twelve Months
Ended
December 31, 2022
Twelve Months
Ended
December 31, 2021
Twelve Months
Ended
December 31, 2020
Twelve Months
Ended
December 31, 2022
Twelve Months
Ended
December 31, 2021
Other information
Leased assets obtained in exchange for new lease liabilities(2) . . . . . . . . . . . .
Cash paid for amounts included in the measurement of lease liabilities . . . . .
$27.9
$31.4
$ 3.5
$32.6
(1) Lease expense is included in cost of sales or SG&A expenses based on the nature of the leased item. Short-
term lease expense is excluded from this amount and is not material. The Company also has certain variable
leases which are not material. The noncash component of lease expense for the twelve months ended
December 31, 2022, 2021 and 2020 was $24.0, $25.4 and $20.1, respectively, is included in the amortization
caption in the consolidated statement of cash flows.
(2) Leased assets obtained in exchange for new lease liabilities in 2022 primarily consisted of a contract
amendment to one of the Company’s international locations, which resulted in an increase to the Company’s
right of use assets and corresponding lease liabilities of approximately $8.2 recorded in the third quarter of
2022, and an amendment to its contract at one of its leased manufacturing facilities, which resulted in an
increase to the Company’s right of use assets and corresponding lease liabilities of approximately $15.2
recorded in the second quarter of 2022. Leased assets obtained in exchange for new lease liabilities in 2021
primarily consisted of equipment lease additions, partially offset by lease modification terminations.
The Company’s minimum annual rentals including reasonably assured renewal options under lease
agreements are as follows:
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating
Leases
$ 29.0
27.6
26.4
18.9
18.1
94.8
Total future minimum lease commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
214.8
(41.0)
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$173.8
81
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
9. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued marketing and promotion costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued wages and related benefit costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 666.7
234.4
66.8
134.9
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,102.8
$ 663.8
201.6
87.7
166.6
$1,119.7
December 31,
2022
December 31,
2021
10. Short-Term Borrowings and Long-Term Debt
Short-term borrowings and long-term debt consist of the following:
December 31,
2022
December 31,
2021
70.6
3.4
74.0
$ 249.7
3.1
$ 252.8
$
$
$
Short-term borrowings
Commercial paper issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Various debt due to international banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
2.45% Senior notes due August 1, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.875% Senior notes due October 1, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan due December 22, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.15% Senior notes due August 1, 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.3% Senior notes due December 15, 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.6% Senior notes due November 15, 2032 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.95% Senior notes due August 1, 2047 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.0% Senior notes due June 15, 2052 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.0
0.0
0.0
400.0
425.0
(0.2)
400.0
(0.7)
500.0
(0.9)
400.0
(2.4)
500.0
(0.3)
(21.0)
Total long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,599.5
0.0
$ 300.0
400.0
(0.1)
400.0
425.0
(0.3)
400.0
(0.8)
0.0
0.0
400.0
(2.5)
0.0
0.0
(11.2)
2,310.1
(699.4)
Net long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,599.5
$1,610.7
Commercial Paper
Under the Company’s commercial paper program, the Company may issue commercial paper notes up to an
aggregate principal amount outstanding at any given time of $1,500.0. The maturities of the notes will vary but
82
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
may not exceed 397 days. The interest rates on the notes will vary based on market conditions and the ratings
assigned to the notes by the rating agencies designated in the agreement at the time of issuance. Subject to market
conditions, the Company intends to utilize the commercial paper program as its primary short-term borrowing
facility. If, for any reason, the Company is unable to access the commercial paper market, the Company’s
revolving credit facility would be utilized to meet the Company’s short-term liquidity needs. The Company had
$70.6 of commercial paper outstanding as of December 31, 2022 with a weighted-average interest rate of
approximately 4.0% and had $249.7 of commercial paper outstanding as of December 31, 2021 with a weighted-
average interest rate of approximately 0.3%. As of December 31, 2022, the Company had approximately
$1,426.0 available through the revolving credit facility and commercial paper program.
2.45% Senior Notes due August 1, 2022
On July 25, 2017, the Company issued $300.0 aggregate principal amount of 2.45% Senior Notes due
August 1, 2022 (the “August 2022 Notes”) to partially finance the Waterpik Acquisition and repay a portion of
the Company’s outstanding commercial paper borrowings. Interest on the August 2022 Notes was payable semi-
annually, on each February 1 and August 1. In July 2022, the Company repaid the full amount of the August
2022 Notes with a portion of the 5.00% Senior notes issued on June 2, 2022 and cash on hand.
2.875% Senior Notes due October 1, 2022
On September 26, 2012, the Company issued $400.0 aggregate principal amount of 2.875% Senior Notes
due 2022 (the “October 2022 Notes”). Interest on the October 2022 Notes was payable semi-annually, on each
April 1 and October 1. On October 1, 2022, the Company repaid the full amount of the October 2022 Notes with
a portion of the proceeds from the 5.00% Senior notes issued on June 2, 2022 and cash on hand.
December 22, 2024 Term Loan
On December 22, 2021, the Company entered into a $400.0 unsecured term loan facility (as amended on
June 16, 2022, the “Term Loan Facility”) with various banks. The loan under the Term Loan Facility (the “Term
Loan”) was fully drawn at closing. Unless prepaid, the Term Loan is due on December 22, 2024. The interest rate
is the Secured Overnight Financing Rate (“SOFR”) plus a spread and an applicable margin based on the
Company’s credit rating, which can range from 60 basis points to 125 bps. The proceeds of the Loan were used
to partially fund the TheraBreath Acquisition, with the remaining proceeds used for the repayment of commercial
paper. In January 2023, the Company repaid $100.0 of the Term Loan with cash on hand and commercial paper
borrowings.
The Term Loan Facility also contains customary events of default, including failure to make certain
payments under the Term Loan Facility when due, breach of covenants, materially incorrect representations and
warranties, default on other material indebtedness, events of bankruptcy, material adverse judgments, certain
events relating to pension plans, the failure of any of the loan documents to remain in full force and effect and the
occurrence of any change in control with respect to the Company.
3.15% Senior Notes due August 1, 2027
On July 25, 2017, the Company issued $425.0 aggregate principal amount of 3.15% Senior Notes due 2027
(the “2027 Notes”). The 2027 Notes bear interest at 3.15%. Interest on the 2027 Notes is payable semi-annually,
on each February 1 and August 1. The 2027 Notes will mature on August 1, 2027 unless earlier retired or
redeemed.
83
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
2.3% Senior Notes due December 15, 2031
The Company financed the TheraBreath Acquisition with a portion of the proceeds from an underwritten
public offering of $400.0 aggregate principal amount Senior Notes due 2031 (the “2031 Notes”). The 2031 Notes
bear interest at 2.3%. Interest on the 2031 Notes is payable semi-annually, on each June 15 and December 15.
The 2031 Notes will mature on December 15, 2031, unless earlier retired or redeemed.
5.6% Senior Notes due November 15, 2032
On October 31, 2022, the Company issued $500.0 aggregate principal amount of 5.60% Senior Notes due
2032 (the “2032 Notes”). The proceeds from the sale of the 2032 Notes were used to repay commercial paper
borrowings incurred to finance the Company’s acquisition of Hero Cosmetics, Inc. The 2032 Notes will mature
on November 15, 2032, unless earlier retired or redeemed.
3.95% Senior Notes due August 1, 2047
On July 25, 2017, the Company issued $400.0 aggregate principal amount of 3.95% Senior Notes due
August 1, 2047 (the “2047 Notes”) to partially finance the Waterpik Acquisition and repay a portion of the
Company’s outstanding commercial paper borrowings. The 2047 Notes bear interest at 3.95%. Interest on the
2047 Notes is payable semi-annually, on each February 1 and August 1. The 2047 Notes will mature on
August 1, 2047, unless earlier retired or redeemed.
5.0% Senior Notes due June 15, 2052
On June 2, 2022, the Company issued $500.0 aggregate principal amount of 5.00% Senior Notes due 2052
(the “2052 Notes”).
In July 2022 a portion of the proceeds from the sale of the Notes were used to repay all of
the Company’s outstanding $300.0 2.45% Senior Notes due August 1, 2022. The remaining proceeds were used
to pay a portion of the Company’s $400.0 outstanding 2.875% Senior Notes due October 1, 2022. The 2052
Notes will mature on June 15, 2052, unless earlier retired.
Revolving Credit Facility
On June 16, 2022, the Company entered into a $1,500 Credit Agreement providing for a revolving credit
facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on June 16, 2027, unless
extended. Prior to the maturity date, the Company may request a one-year extension of the facility (not to exceed
a total of two years beyond the initial maturity date). We have the ability to increase our borrowing up to an
additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement.
Borrowings under the Credit Agreement are available for general corporate purposes and are used to support our
$1,500.0 commercial paper program.
The Revolving Credit Facility also contains customary events of default, including failure to make certain
payments under the Term Loan Facility when due, breach of covenants, materially incorrect representations and
warranties, default on other material indebtedness, events of bankruptcy, material adverse judgments, certain
events relating to pension plans, the failure of any of the loan documents to remain in full force and effect and the
occurrence of any change in control with respect to the Company.
84
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
11. Income Taxes
The components of income before taxes are as follows:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$447.1
76.2
$ 958.6
73.1
$921.6
52.2
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$523.3
$1,031.7
$973.8
2022
2021
2020
The following table summarizes the provision for U.S. federal, state and foreign income taxes:
Current:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$162.0
44.8
20.3
$130.6
34.1
19.2
$114.2
32.1
15.9
2022
2021
2020
Deferred:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
227.1
183.9
162.2
(78.8)
(38.3)
(0.6)
(117.7)
16.5
4.5
(0.7)
20.3
22.9
4.2
(1.4)
25.7
Total provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$109.4
$204.2
$187.9
85
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
Deferred tax assets (liabilities) consist of the following at December 31:
Deferred tax assets:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension, postretirement and postemployment benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (including reserves)
Sec 174 R&D Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carryforwards/other tax attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade names and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
2021
$
8.9 $
46.9
5.0
16.1
22.0
2.8
8.8
0.0
8.6
52.0
6.1
23.3
0.0
2.9
8.2
10.3
110.5
(9.4)
101.1
111.4
(13.1)
98.3
(272.1)
(504.5)
(74.2)
(4.5)
(270.2)
(508.5)
(55.5)
0.0
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(855.3)
(834.2)
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(754.2) $(735.9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long term net deferred tax asset
Long term net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.8
(757.0)
9.2
(745.1)
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(754.2) $(735.9)
The difference between tax expense and the tax that would result from the application of the federal
statutory rate is as follows:
Statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax that would result from use of the federal statutory rate . . . . . . . . . . . . . . . . . . . . .
State and local income tax, net of federal effect
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Varying tax rates of foreign affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Options Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for Uncertain Tax Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
2021
2020
21% 21%
21%
$109.9
5.2
2.9
(4.1)
(5.2)
(0.9)
1.6
$216.6
30.5
2.6
(8.5)
(29.0)
0.0
(8.0)
$204.5
28.7
2.8
2.9
(29.4)
(10.6)
(11.0)
Recorded tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$109.4
$204.2
$187.9
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.9% 19.8% 19.3%
At December 31, 2022, certain foreign subsidiaries of the Company had net operating loss carryforwards of
approximately $27.2. The net operating loss carryforwards are not subject to expiration.
86
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The Company believes that it is more likely than not that the benefit from these net operating loss
carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of
$8.9 and $8.1 at December 31, 2022 and 2021, respectively, on the deferred tax asset relating to these net
operating loss carryforwards.
The Company also believes that it is more likely than not that the benefit from certain additional deferred
tax assets of a foreign subsidiary will not be realized. In recognition of this risk, the Company maintains a
valuation allowance of $0.5 and $0.9 at December 31, 2022 and 2021, respectively, on these deferred tax assets.
As of December 31, 2020 the Company maintained a valuation allowance of $12.6 relating to certain
foreign tax credit carryforwards. During 2021, the Company determined that it was able to utilize approximately
$8.5 in foreign tax credits in 2018, 2019, and 2020, resulting in a reduction in the valuation allowance, and a
corresponding tax benefit. Accordingly, the Company filed amended returns with the IRS claiming refunds for
2018 and 2019, totaling $6.5, and utilized $2.0 of foreign tax credits in 2020. During 2022, the Company
determined that it was able to utilize the remaining foreign tax credit carryforwards in 2022 and future years.
This resulted in a reduction of the remaining valuation allowance and a corresponding tax benefit of
approximately $4.0. The Company does not have any undistributed earnings of foreign subsidiaries that are
considered to be indefinitely reinvested outside of the U.S.
The Company has recorded liabilities in connection with uncertain tax positions, which, although
supportable by the Company, may be challenged by tax authorities.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Unrecognized tax benefits at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increases—tax positions in current period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross decreases—tax positions in prior period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreases due to settlements and payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
2021
2020
$ 4.7
2.4
0.0
(0.1)
0.0
(1.2)
$ 7.3
0.3
0.8
0.0
0.0
(3.7)
$ 18.9
0.0
1.6
(11.8)
(1.4)
0.0
Unrecognized tax benefits at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5.8
$ 4.7
$ 7.3
During 2020 the Company reached a settlement with the IRS for $1.4 relating to the worthless stock
deduction and released the related $12.0 reserve, which resulted in a $10.6 income tax benefit.
Included in the balance of unrecognized tax benefits at December 31, 2022, 2021 and 2020 are $4.8, $4.1
and $6.2, respectively, of tax benefits that, if recognized, would affect the effective tax rate. Also included in the
balance of unrecognized tax benefits at December 31, 2022, 2021 and 2020 are $1.0, $0.6 and $1.1, respectively,
of tax benefits that, if recognized, would result in adjustments to deferred taxes.
The Company is subject to U.S. federal income tax as well as income tax in multiple state and international
jurisdictions. The Company’s U.S. federal income tax returns are closed for tax years through 2018. The
Company is currently under audit by several state taxing authorities for the years 2016 through 2020. It is
reasonably possible that a decrease of approximately $0.7 in the unrecognized tax benefits may occur within the
next twelve months related to the settlement of these audits or the lapse of applicable statutes of limitations.
87
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The Company’s policy for recording interest associated with income tax examinations is to record interest
as a component of Income before Income Taxes. During the twelve months ended December 31, 2022, 2021, and
2020, the Company recognized interest expense associated with uncertain tax positions of approximately $0.1,
$0.5 and $0.4, respectively. As of December 31, 2022, 2021, and 2020, the Company had accrued interest
expense related to unrecognized tax benefits of $0.7, $0.5 and $1.0, respectively.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “Act”), which
contains provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on
stock buybacks. While we are still evaluating the impact of the Act, we do not expect any material changes on
our consolidated financial position, results of operations or cash flows.
12. Stock Based Compensation Plans and Other Benefit Plans
The Company has non-qualified options outstanding under the Church & Dwight Co., Inc. 2022 Omnibus
Equity Compensation Plan (the “Omnibus Equity Plan”). Under the Omnibus Equity Plan, the Company may
grant stock options and other stock-based awards to employees and directors. Stock options outstanding under
the Omnibus Equity Plan are issued at market value on the date of grant (with the exception of options granted to
former WATERPIK employees as part of the WATERPIK Acquisition), vest on the third anniversary of the date
of grant and must be exercised within 10 years of the date of grant.
However, upon a participant’s termination of employment (other than termination for cause, death,
disability or retirement), a participant will generally have 30 days (90 days for grants made after May 13, 2022)
to exercise any vested stock options, subject to specified conditions. If, upon termination of a participant’s
employment (other than a termination for cause), a participant is at least 55 years old, has at least five years of
service, and the sum of the participant’s age and years of service is at least 65, the participant may exercise any
vested stock options granted between 2007 through 2017 within a period of three years from the date of
termination or, if earlier, the date such stock options otherwise would have expired, subject to specified
conditions. Starting with stock options granted in 2018, a terminated employee who meets the above conditions
may exercise any stock options until the date such stock options otherwise would have expired, subject to
specified conditions. Issuances of Common Stock to satisfy employee stock option exercises currently are made
from treasury stock.
Stock option transactions for the year ended December 31, 2022 were as follows:
Outstanding as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options
11.3
1.6
(0.7)
(0.3)
Outstanding as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . .
11.9
Weighted
Average
Exercise
Price
$58.83
85.14
41.54
79.19
$62.64
Exercisable as of December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . .
7.3
$50.90
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
5.7
4.0
$227.4
$216.3
88
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The following table summarizes information relating to options outstanding and exercisable as of
December 31, 2022:
Range of Exercise Prices
$30.01 - $40.00
$40.01 - $50.00
$50.01 - $60.00
$60.01 - $70.00
$70.01 - $80.00
$80.01 - $90.00
$90.01 - $100.00
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Options Outstanding
Options Exercisable
Outstanding
as of
12/31/2022
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise
Price
Exercisable
as of
12/31/2022
Weighted
Average
Exercise
Price
1.2
2.3
2.5
0.1
2.9
2.8
0.1
11.9
1.3
2.9
5.0
5.9
7.0
9.0
8.3
5.7
$34.07
$43.90
$51.98
$65.27
$75.35
$84.74
$92.78
$62.64
1.2
2.3
2.5
0.1
1.2
0.0
0.0
7.3
$34.07
$43.90
$51.98
$65.27
$77.26
0.0
$
0.0
$
$50.90
The table above represents the Company’s estimate of stock options fully vested and expected to vest.
Expected forfeitures are not material and, therefore, are not reflected in the table above.
The following table provides information regarding the intrinsic value of stock options exercised and stock
compensation expense related to stock option awards:
Intrinsic Value of Stock Options Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Compensation Expense Related to Stock Option Awards . . . . . . . . . . . . . . . . . .
Issued Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average Fair Value of Stock Options issued (per share)
. . . . . . . . . . . . . . .
Fair Value of Stock Options Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 32.1
$ 25.7
1.6
$21.50
$ 33.6
$157.3
$ 23.3
1.5
$17.32
$ 26.6
$159.8
$ 21.1
1.9
$12.85
$ 24.5
2022
2021
2020
The following table provides a summary of the assumptions used in the valuation of issued stock options:
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.9% 1.3% 0.5%
7.1
7.2
21.7%20.7% 19.9%
1.2% 1.2% 1.3%
7.3
2022
2021
2020
The fair value of stock options is based upon the Black Scholes option pricing model. The Company
determined the stock options’ lives based on historical exercise behavior and their expected volatility and
dividend yield based on the historical changes in stock price and dividend payments. The risk-free interest rate is
based on the yield of an applicable term Treasury instrument.
As of December 31, 2022, there was a fair value of $23.5 related to unamortized stock option compensation
expense, which is expected to be recognized over the next three years. The Company’s Consolidated Statements
of Cash Flow reflect an add back to Net Cash Provided by Operating Activities of $32.3, $23.7 and $21.5 in
2022, 2021 and 2020, respectively, for non-cash compensation expense, primarily stock option expense.
89
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
In January 2021, the Company issued cash-settled stock units under the Omnibus Equity Plan to all
employees at the level of vice president and below. These restricted stock units are scheduled to vest and be
settled on the third anniversary of the date of grant, subject to continued employment through such date.
In May 2018, the Company issued cash-settled stock units under the Omnibus Equity Plan to all employees
at the level of vice president and below. These restricted stock units were scheduled to vest and be settled on the
third anniversary of the date of grant. In December 2020, the Company accelerated the grant to vest in December
2020.
As a result of the issued cash-settled stock units, the Company recorded stock compensation expense of
$0.3, $1.9 and $3.1 in 2022, 2021 and 2020, respectively. The liability was approximately $2.2 and $1.9 as of
December 31, 2022 and 2021, respectively, and there was no liability as of December 31, 2020.
In connection with the Hero Acquisition, 854,882 shares of restricted stock were issued in October 2022.
The restricted stock will be recognized as compensation expense as the stock is subject to vesting requirements
for individuals who received the restricted stock and will continue to be employed by the Company. The vesting
requirements are satisfied at various dates over a three-year period from the date of the acquisition. The
Company’s Consolidated Statements of Cash Flow reflect an add back to Net Cash Provided by Operating
Activities of $6.0, for non-cash compensation expense related to the Hero restricted stock.
Other Benefit Plans
Deferred Compensation Plans
The Company maintains a non-qualified deferred compensation plan under which certain members of
management are eligible to defer a maximum of 85% of their regular compensation (i.e., salary) and, in general,
up to 85% of their incentive bonus. The amounts deferred under this plan are credited with earnings or losses
based upon changes in values of notional investments selected by the plan participant. The investment options
available include notional investments in various stock, bond and money market funds as well as the Company’s
Common Stock. Each plan participant is fully vested in the amounts the participant defers. The plan permits the
Company to make profit sharing contributions that cannot otherwise be contributed to the qualified savings and
profit-sharing plan due to limitations established by the Internal Revenue Service. These contributions vest under
the same vesting schedule applicable to the qualified plan.
The liability to plan participants for contributions designated for notional investment in Common Stock is
based on the quoted fair value of the Common Stock plus any dividends credited. The Company uses cash-settled
hedging instruments to minimize the cost related to the volatility of Common Stock. At December 31, 2022 and
2021, the amount of the Company’s liability under the deferred compensation plan is included in Current and
Deferred and Other Long-term Liabilities and was $105.8 and $131.9, respectively and the funded balances
recorded in Other Assets amounted to $92.6 and $107.3, respectively. The amounts charged to earnings,
including the effect of the hedges, totaled expense of $1.2, $2.2 and $2.1 in 2022, 2021 and 2020, respectively.
Non-employee members of the Company’s Board are eligible to defer up to 100% of their directors’
compensation into a similar plan; however, the only option for investment is Common Stock. Members of the
Board are fully vested in their account balance. As of December 31, 2022, there were approximately 129,000
shares of Common Stock from shares held as Treasury Stock in a rabbi trust to protect the interest of the
directors’ deferred compensation plan participants in the event of a change of control.
90
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
13. Share Repurchases
On November 1, 2017, the Board authorized a share repurchase program, under which the Company may
repurchase up to $500.0 in shares of Common Stock (the “2017 Share Repurchase Program”).
In December 2020, the Company entered into an accelerated share repurchase (“ASR”) contract with a
commercial bank to purchase Common Stock. The Company paid $300.0 to the bank, inclusive of fees, and
received an initial delivery of shares equal to $270.0, or 3.1 million shares. The Company used cash on hand and
short-term borrowings to fund the initial purchase price. Upon the completion of the ASR, which ended in
February 2021, the bank delivered an additional 0.4 million shares to the Company. The final shares delivered to
the Company were determined by the average price per share paid by the bank during the purchase period. All
3.5 million shares were purchased under the Company’s evergreen program.
In August 2021, the Company executed an agreement to purchase up to $200.0 of its Common Stock
through October 31, 2021. The Company purchased 1.6 million shares for approximately $130.0 through
October, inclusive of fees, all of which was purchased under the 2017 Share Repurchase Program.
On October 28, 2021, the Board authorized a new share repurchase program, under which the Company
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 the Company’s evergreen share repurchase program, authorized
by the Board on January 29, 2014, under which the Company 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, the Company executed open market purchases of 1.8 million shares for $170.3, inclusive
of fees, of which $100.0 was purchased under the evergreen share repurchase program and $70.3 was purchased
under the 2021 Share Repurchase Program. In December 2021, the Company also entered into an accelerated
share repurchase contract with a commercial bank to purchase Common Stock. The Company 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. The
Company 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 to the Company.
The final shares delivered to the Company 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.
As a result of the Company’s stock repurchases, there remains $729.7 of share repurchase availability under
the 2021 Share Repurchase Program as of December 31, 2022.
14. Accumulated Other Comprehensive Income (Loss)
Comprehensive income is defined as net income and other changes in stockholders’ equity from transactions
and other events from sources other than stockholders.
91
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The components of changes in accumulated other comprehensive income (“AOCI”) are as follows:
Foreign
Currency
Adjustments
Defined
Benefit
Plans
Derivative
Agreements
Accumulated
Other
Comprehensive
Income (Loss)
Balance December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(36.8)
10.4
Other comprehensive income before reclassifications . . . . . . . . . . .
0.0
Amounts reclassified to consolidated statement of income(a) . . . . . .
0.0
Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .
10.4
Balance December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(26.4)
(3.8)
Other comprehensive income (loss) before reclassifications . . . . . .
0.0
Amounts reclassified to consolidated statement of income(a) . . . . . .
0.0
Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .
(3.8)
Balance December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(30.2)
(16.2)
Other comprehensive income (loss) before reclassifications . . . . . .
0.0
Amounts reclassified to consolidated statement of income(a) . . . . . .
0.0
Tax benefit (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.0
0.0
0.0
0.0
0.0
$ 0.0
(0.8)
0.0
0.2
(0.6)
$(0.6)
3.1
0.0
(0.8)
$(29.9)
(34.8)
5.8
7.7
(21.3)
$(51.2)
26.7
(8.2)
(4.7)
13.8
$(37.4)
72.6
(2.5)
(17.3)
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .
(16.2)
2.3
52.8
$(66.7)
(24.4)
5.8
7.7
(10.9)
$(77.6)
22.1
(8.2)
(4.5)
9.4
$(68.2)
59.5
(2.5)
(18.1)
38.9
Balance December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(46.4)
$ 1.7
$ 15.4
$(29.3)
(a) Amounts reclassified to cost of sales, selling, general and administrative expenses, or interest expense.
15. Commitments, Contingencies and Guarantees
Commitments
a. The Company has a partnership with a supplier of raw materials that mines and processes sodium-based
mineral deposits. The Company purchases the majority of its sodium-based raw material requirements from the
partnership. The partnership agreement terminates upon two years’ written notice by either partner. Under the
partnership agreement, the Company has an annual commitment to purchase 240,000 tons of sodium-based raw
materials at the prevailing market price. The Company is not engaged in any other material transactions with the
partnership or the partner supplier.
b. As of December 31, 2022, the Company had commitments of approximately $385.3. These commitments
include the purchase of raw materials, packaging supplies and services from its vendors at market prices to
enable the Company to respond quickly to changes in customer orders or requirements, as well as costs
associated with licensing and promotion agreements.
c. As of December 31, 2022, the Company had various guarantees and letters of credit totaling $5.1.
d. In connection with the Company’s acquisition of Agro BioSciences, Inc. on January 17, 2017, the
Company was obligated to pay an additional amount of up to $25.0 based on sales performance in 2019. The
initial fair value of this business acquisition liability was $17.8, which was established in the purchase price
allocation. In December 2019, the liability was lowered to $14.2 based on 2019 sales. The reduction was
recorded in SG&A in the SPD segment. In April 2020, a payment of $14.5 was paid to settle the liability.
92
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
In connection with the Passport Acquisition, the Company was obligated to pay an additional amount of up
to $25.0 based on sales performance through 2020. The initial fair value of this business acquisition liability was
$7.3, which was established in the purchase price allocation. During the second quarter of 2019, the Company
recorded a reduction in fair value of the entire $7.3 Passport business acquisition liability based on the revised
valuation due to updated sales forecasts. The reduction was recorded in SG&A in the SPD segment. The business
acquisition liability was reassessed at each balance sheet date leading up to December 31, 2020 with no
additional changes to the fair value.
In connection with the Flawless Acquisition, the Company was obligated to pay an additional amount of up
to $425.0 based on sales performance through 2021. The initial fair value of this business acquisition liability
was $182.0. That amount was established in the purchase price allocation. During the years ended December 31,
2021 and 2020, the Company decreased the fair value of the business acquisition liability by $98.0 and by $94.0,
respectively, based on updated sales forecasts. As a result of these adjustments, the fair value of this business
acquisition liability was $0.0 as of December 31, 2021, which was the end of the earn-out period. The changes in
fair value were recorded within the Consumer Domestic and Consumer International segments.
In connection with the Zicam Acquisition, the Company deferred an additional cash payment of $20.0
related to certain indemnifications provided by the seller. The additional amount is payable five years from the
closing.
In connection with the TheraBreath Acquisition, the Company deferred an additional cash payment of $14.0
related to certain indemnity obligations provided by the seller. The additional amount, to the extent not used in
satisfaction of such indemnity obligations, is payable in installments between two and four years from the
closing.
In connection with the Hero Acquisition, the Company deferred an additional cash payment of $8.0 to
satisfy certain indemnification obligations. The additional amount is payable five years from the closing.
Legal proceedings
e. In addition, in conjunction with the Company’s acquisition and divestiture activities, the Company
entered into select guarantees and indemnifications of performance with respect to the fulfillment of the
Company’s commitments under applicable purchase and sale agreements. The arrangements generally indemnify
the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties
surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract.
Representations and warranties that survive the closing date generally survive for periods up to five years or the
expiration of the applicable statutes of limitations. Potential losses under the indemnifications are generally
limited to a portion of the original transaction price, or to other lesser specific dollar amounts for select
provisions. With respect to sale transactions, the Company also routinely enters into non-competition agreements
for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities,
if triggered, could have a materially adverse impact on the Company’s financial condition, results of operations
and cash flows.
f. In addition to the matters described above, from time to time in the ordinary course of its business the
Company is the subject of, or party to, various pending or threatened legal, regulatory or governmental actions or
other proceedings, including, without limitation, those relating to, intellectual property, commercial transactions,
product liability, purported consumer class actions, employment matters, antitrust, environmental, health, safety
93
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
and other compliance related matters. Such proceedings are generally subject to considerable uncertainty and
their outcomes, and any related damages, may not be reasonably predictable or estimable. Any such proceedings
could result in a material adverse outcome negatively impacting the Company’s business, financial condition,
results of operations or cash flows.
16. Related Party Transactions
The following summarizes the balances and transactions between the Company and each of Armand and
ArmaKleen, in which the Company holds a 50% ownership interest:
Armand
Year Ended
December 31,
ArmaKleen
Year Ended
December 31,
2022
2021
2020
2022
2021
2020
Purchases by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Administration & Management Oversight Services(1)
$13.7
$ 0.0
$ 0.9
$ 1.0
$ 2.2
$12.9
$ 0.0
$ 1.0
$ 1.2
$ 2.2
$14.2
$ 0.0
$ 0.7
$ 1.4
$ 2.1
$0.0
$0.9
$1.1
$0.0
$2.0
$0.0
$1.2
$0.9
$0.0
$2.1
$0.0
$1.1
$0.5
$0.0
$2.2
(1) Billed by Company and recorded as a reduction of SG&A expenses.
17. Segments
Segment Information
The Company operates three reportable segments: Consumer Domestic, Consumer International and
Specialty Products Division. These segments are determined based on differences in the nature of products and
organizational and ownership structures. The Company also has a Corporate segment.
Segment revenues are derived from the sale of the following products:
Segment
Consumer Domestic
Consumer International
SPD
Products
Household and personal care products
Primarily personal care products
Specialty chemical products
The Corporate segment income consists of equity in earnings of affiliates. As of December 31, 2022, the
Company held 50% ownership interests in each of Armand and ArmaKleen, respectively. The Company’s equity
in earnings of Armand and ArmaKleen, totaling $12.3, $9.4, and $6.7 for the three years ending December 31,
2022, 2021 and 2020, respectively, 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 in the table below.
94
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
The following table presents selected financial information relating to the Company’s segments for each of
the three years in the period ended December 31, 2022:
Net sales
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing Expenses
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, General and Administrative Expenses
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from Operations
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in Earnings of Affiliates
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Before Income Taxes
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Identifiable Assets
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Expenditures
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation & Amortization
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Corporate reflects the following:
Consumer
Domestic
Consumer
International
SPD
Corporate(1) As Reported
$4,131.0
3,941.9
3,767.6
$ 896.1
912.2
828.2
$348.5
336.0
300.0
$
0.0
0.0
0.0
1,794.1
1,795.8
1,801.1
412.9
442.1
460.6
882.1
445.3
455.6
499.1
908.4
884.9
0.0
0.0
0.0
427.3
861.4
832.4
372.4
402.1
368.8
117.7
131.1
126.9
208.5
135.7
128.7
46.2
135.3
113.2
0.0
0.0
0.0
38.8
127.3
105.0
6,846.9
6,354.5
5,819.8
1,060.5
1,192.9
1,144.5
159.1
100.3
81.8
172.1
170.0
142.8
10.0
8.4
7.1
30.1
31.1
29.6
117.8
112.7
104.1
4.6
4.5
3.7
60.7
72.8
68.8
52.5
35.4
31.6
0.0
0.0
0.0
44.9
33.6
29.7
332.9
332.7
339.7
9.7
10.1
10.0
13.8
15.4
14.5
(34.3)
(47.1)
(59.8)
0.0
0.0
0.0
(34.3)
(47.1)
(59.8)
0.0
0.0
0.0
12.3
9.4
6.7
12.3
9.4
6.7
105.3
116.4
110.5
0.0
0.0
0.0
3.0
2.6
2.8
$5,375.6
5,190.1
4,895.8
2,250.0
2,263.5
2,214.2
535.2
577.7
591.2
1,117.0
606.7
593.3
597.8
1,079.1
1,029.7
12.3
9.4
6.7
523.3
1,031.7
973.8
8,345.6
7,996.5
7,414.5
178.8
118.8
98.9
219.0
219.1
189.7
(A) The administrative costs of the production planning and logistics functions are included in segment
Selling, General and Administrative expenses but are elements of Cost of Sales in the Company’s
Consolidated Statements of Income. Such amounts were $34.3, $47.1, and $59.8 for 2022, 2021 and
2020, respectively.
95
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In millions, except share and per share data)
(B) Equity in earnings (loss) of affiliates from Armand and ArmaKleen for the year ended December 31,
2022, 2021 and 2020.
(C) Corporate assets include deferred compensation investments and the Company’s investment in
unconsolidated affiliates.
Other than the differences noted in the footnote above, the accounting policies followed by each of the
segments, including intersegment transactions, are substantially consistent with the accounting policies described
in Note 1.
Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table
above, were $15.1, $10.8 and $11.7 for the twelve months ended December 31, 2022, 2021 and 2020,
respectively.
Product line revenues from external customers for each of the three years ended December 31, 2022, 2021
and 2020 were as follows:
Household Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personal Care Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,272.0
1,859.0
$2,103.0
1,838.9
$2,038.5
1,729.1
Total Consumer Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Consumer International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total SPD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,131.0
896.1
348.5
3,941.9
912.2
336.0
3,767.6
828.2
300.0
Total Consolidated Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$5,375.6
$5,190.1
$4,895.8
2022
2021
2020
Household Products include laundry, deodorizing, and cleaning products. Personal Care Products include
condoms, pregnancy kits, oral care products, skin care products, hair care products and gummy dietary
supplements.
Geographic Information
Approximately 83%, 82% and 83% of the net sales reported in the accompanying consolidated financial
statements in 2022, 2021 and 2020, respectively, were to customers in the U.S. Approximately 97%, 96% and
96% of long-lived assets were located in the U.S. at December 31, 2022, 2021 and 2020, respectively. Other than
the U.S., no one country accounts for more than 5% of consolidated net sales and 5% of total assets.
Customers
A group of four customers accounted for approximately 42% of consolidated net sales in 2022. A group of
three customers accounted for approximately 37% of consolidated net sales in 2021 and 36% in 2020, of which a
single customer (Walmart Inc. and its affiliates) accounted for approximately 24%, 24% and 23% in 2022, 2021
and 2020, respectively.
96
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at
the end of the period covered by this Annual Report. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the
period covered by this Annual Report are effective to provide reasonable assurance that the information required
to be disclosed by the Company in reports filed under the Exchange Act are (i) recorded, processed, summarized
and reported within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and
communicated to the Company’s management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding the disclosure.
b) Management’s Report on Internal Control Over Financial Reporting
The Company’s management’s report on internal control over financial reporting is set forth in Item 8 of
this Annual Report and is incorporated by reference herein. The Company’s independent registered public
accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial
reporting, which is set forth in Item 8 of this Annual Report.
c) Change in Internal Control over Financial Reporting
No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) occurred during the Company’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
97
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item is incorporated by reference to the information under the captions
“Election of Directors,” “Information about the Company’s Executive Officers,” “Corporate Governance and
Other Board Matters – Code of Conduct,” and “Corporate Governance and Other Board Matters– Board of
Directors Meetings and Committees – Audit Committee,” in the Company’s definitive proxy statement, which
will be filed with the Commission not later than 120 days after the close of the fiscal year covered by this Annual
Report.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference to the information under the captions
“Compensation Discussion and Analysis,” “2022 Summary Compensation Table,” “2022 Grants of Plan Based
Awards,” “2022 Outstanding Equity Awards at Fiscal Year-End,” “2022 Option Exercises and Stock Vested,”
“2022 Nonqualified Deferred Compensation,” “Potential Payments Upon Termination or Change in Control” and
“Compensation & Human Capital Committee Report” in the Company’s definitive proxy statement, which will
be filed with the Commission not later than 120 days after the close of the fiscal year covered by this Annual
Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Information required by this item is incorporated by reference to the information under the captions “Equity
Compensation Plan Information as of December 31, 2022” and “Securities Ownership of Certain Beneficial
Owners and Management” in the Company’s definitive proxy statement, which will be filed with the
Commission not later than 120 days after the close of the fiscal year covered by this Annual Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information required by this item is incorporated by reference to the information under the caption
“Corporate Governance and other Board Matters – Board of Directors Independence” in the Company’s
definitive proxy statement, which will be filed with the Commission not later than 120 days after the close of the
fiscal year covered by this Annual Report.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by this item in relation to our principal accountant, Deloitte & Touche LLP (PCAOB
ID No. 34) is incorporated by reference to the information under the caption “Fees Paid to Independent
Registered Public Accounting Firm” in the Company’s definitive proxy statement, which will be filed with the
Commission not later than 120 days after the close of the fiscal year covered by this Annual Report.
98
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a) 1. Financial Statements and Schedule
The following Consolidated Financial Statements are included in Item 8 of this Form 10-K:
Consolidated Statements of Income for each of the three years in the period ended December 31,
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flow for each of the three years in the period ended December 31,
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule II - Valuation and Qualifying Accounts for each of the three years in the period ended
60
61
62
64
65
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105
(a) 3. Exhibits
Unless otherwise noted, the file number for all the Company’s filings with the Securities and Exchange
Commission referenced below is 1-10585.
(3.1)
(3.2)
(3.3)
(4.1)
(4.2)
(4.3)
(4.4)
(4.5)
(4.6)
Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to
Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2020.
Amendment to the Company’s Amended and Restated Certificate of Incorporation, incorporated
by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed on April 30, 2021.
By-laws of the Company, amended and restated as of December 23, 2022, incorporated by
reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed on December 23,
2022.
Indenture, dated as of December 15, 2010, between Church & Dwight Co., Inc. and The Bank of
New York Mellon Trust Company, N.A., as trustee, relating to the 2.875% Notes due 2022,
incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed on
December 15, 2010.
Second Supplemental Indenture, dated as of September 26, 2012, between Church & Dwight Co.,
Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 2.875%
Notes due 2022, incorporated by reference to Exhibit 4.2 to the Company’s current report on
Form 8-K filed on September 26, 2012.
Indenture, dated as of December 9, 2014, between Church & Dwight Co., Inc. and Wells Fargo
Bank, National Association, as trustee, incorporated by reference to Exhibit 4.1 to the Company’s
current report on Form 8-K filed on December 9, 2014.
Second Supplemental Indenture, dated as of July 25, 2017, between Church & Dwight Co., Inc.
and Wells Fargo Bank, National Association, as trustee, relating to the Notes, incorporated by
reference to Exhibit 4.2 of the Company’s current report on Form 8-K filed on July 25, 2017.
Indenture, dated as of December 10, 2021, between Church and Dwight Co., Inc. and Deutsche
Bank Trust Company Americas, as trustee, relating to the Notes, incorporated by reference to
Exhibit 4.1 to the Company’s current report on Form 8-K filed on December 10, 2021.
First Supplemental Indenture, dated as of December 10, 2021, between Church & Dwight Co.,
Inc. and Deutsche Bank Trust Company Americas, as trustee, relating to the Notes, incorporated
by reference to Exhibit 4.2 to the Company’s current report on Form 8-K filed on December 10,
2021.
99
(4.7)
(4.8)
(4.9)
(10.1)
Second Supplemental Indenture, dated as of June 2, 2022, between Church & Dwight Co., Inc.
and Deutsche Bank Trust Company Americas, as trustee, incorporated by reference to Exhibit 4.2
to the Company’s current report on Form 8-K filed on June 2, 2022.
Third Supplemental Indenture, dated as of November 2, 2022, between Church & Dwight Co.,
Inc. and Deutsche Bank Trust Company Americas, as trustee, incorporated by reference to Exhibit
4.2 to the Company’s current report on Form 8-K filed on November 2, 2022.
Description of Registrant’s Securities, incorporated by reference to Exhibit 4.5 to the Company’s
annual report on Form 10-K for the year ended December 31, 2019.
Credit Agreement dated June 16, 2022, among Church & Dwight Co., Inc., the initial lenders
named therein, Bank of America, N.A., as lead administrative agent, swing line lender, and L/C
issuer, Wells Fargo Bank, National Association, as co-administrative agent and syndication agent,
and Truist Bank, as syndication agent incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed on June 21, 2022.
•
(10.2)
Term Credit Agreement dated December 22, 2021, by and among Church & Dwight Co., Inc. the
lenders party thereto, and Bank of America, N.A., as administrative agent.
(10.3)
(10.4)
(10.5)
(10.6)
* (10.7)
* (10.8)
* (10.9)
* (10.10)
* (10.11)
* (10.12)
First Amendment to Credit Agreement dated June 16, 2022, among Church & Dwight Co., Inc.,
the lenders named therein, and Bank of America, N.A., as administrative agent incorporated by
reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on June 21, 2022.
Form of Commercial Paper Dealer Agreement, dated February 23, 2017, by and between
Church & Dwight Co., Inc. and Dealer, incorporated by reference to Exhibit 10.2 to the
Company’s annual report on Form 10-K for the year ended December 31, 2016.
Form of Amended and Restated Commercial Paper Dealer Agreement, dated February 23, 2017,
by and between Church & Dwight Co., Inc. and Dealer, incorporated by reference to Exhibit 10.3
to the Company’s annual report on Form 10-K for the year ended December 31, 2016.
Stock Purchase Agreement, dated as of July 17, 2017, among Church & Dwight Co., Inc., PIK
Holdings, Inc., the Representative and the stockholders party thereto, incorporated by reference to
Exhibit 2.1 of the Company’s current report on Form 8-K filed on July 17, 2017.
Church & Dwight Co., Inc. Executive Deferred Compensation Plan, effective as of June 1, 1997,
incorporated by reference to Exhibit 10(f) to the Company’s annual report on Form 10-K for the
year ended December 31, 1997.
Amendment to the Church & Dwight Co., Inc. Executive Deferred Compensation Plan, effective
January 1, 2007, incorporated by reference to Exhibit 10.4.1 to the Company’s annual report on
Form 10-K for the year ended December 31, 2011.
Amendment to the Church & Dwight Co., Inc. Executive Deferred Compensation Plan, effective
February 1, 2012, incorporated by reference to Exhibit 10.4.2 to the Company’s annual report on
Form 10-K for the year ended December 31, 2011.
Church & Dwight Co., Inc. Executive Deferred Compensation Plan II, amended and restated as of
January 1, 2012, incorporated by reference to Exhibit 10.5 to the Company’s annual report on
Form 10-K for the year ended December 31, 2011.
Deferred Compensation Plan for Directors effective as of May 1, 2008, incorporated by reference
to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the quarter ended March 28,
2008.
Amended and Restated Compensation Plan for Directors, effective January 1, 2015, incorporated
by reference to Exhibit 10.7 to the Company’s annual report on Form 10-K for the year ended
December 31, 2015.
100
* (10.13)
Amended and Restated Compensation Plan for Directors, dated November 1, 2017, incorporated
by reference to Exhibit 10.9.2 to the Company’s annual report on Form 10-K for the year ended
December 31, 2017.
• * (10.14)
Amended and Restated Compensation Plan for Directors, dated February 1, 2023.
* (10.15)
* (10.16)
* (10.17)
* (10.18)
* (10.19)
* (10.20)
* (10.21)
* (10.22)
* (10.23)
* (10.24)
* (10.25)
* (10.26)
* (10.27)
The Church & Dwight Co., Inc. Stock Award Plan as amended, incorporated by reference to
Exhibit 10 to the Company’s quarterly report on Form 10-Q for the quarter ended June 29, 2007.
The Stock Option Plan for Directors, effective as of January 1, 1991, incorporated by reference to
Exhibit 10(j) to the Company’s annual report on Form 10-K for the year ended December 31,
2005.
Church & Dwight Co., Inc., Amended and Restated Omnibus Equity Compensation Plan,
incorporated by reference to Exhibit A to the Company’s proxy statement for its 2013 Annual
Meeting of Stockholders, filed on March 21, 2013.
First Amendment to Church & Dwight Co., Inc. Amended and Restated Omnibus Equity
Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s quarterly report
on Form 10-Q for the quarter ended October 31, 2019.
Form of Award Agreement for CEO and EVPs Under the Church & Dwight Co., Inc., Amended
and Restated Omnibus Equity Compensation Plan, incorporated by reference to Exhibit 10.2 to
the Company’s quarterly report on Form 10-Q for the quarter ended October 31, 2019.
Form of Award Agreement for CEO and EVPs Under the Church & Dwight Co., Inc., Amended
and Restated Omnibus Equity Compensation Plan incorporated by reference to Exhibit 10.13.1 to
the Company’s annual report on Form 10-K for the year ended December 31, 2021.
Form of Award Agreement for Employees Under the Church & Dwight Co., Inc., Amended and
Restated Omnibus Equity Compensation Plan, incorporated by reference to Exhibit 10.12.2 to the
Company’s annual report on Form 10-K for the year ended December 31, 2018.
Form of Award Agreement for Employees Under the Church & Dwight Co., Inc., Amended and
Restated Omnibus Equity Compensation Plan incorporated by reference to Exhibit 10.14.1 to the
Company’s annual report on Form 10-K for the year ended December 31, 2021.
Form of Award Agreement for Directors Under the Church & Dwight Co., Inc., Amended and
Restated Omnibus Equity Compensation Plan, incorporated by reference to Exhibit 10.12.1 to the
Company’s annual report on Form 10-K for the year ended December 31, 2018.
Church & Dwight Co., Inc. Amended and Restated Omnibus Equity Compensation Plan,
incorporated by reference to Appendix A to the Company’s proxy statement for its 2022 Annual
Meeting of Stockholders, filed on March 18, 2022.
Form of Non-Qualified Stock Option Grant Agreement, incorporated by reference to Exhibit 10.1
to the Company’s current report on Form 8-K filed on June 3, 2022.
Form of Restricted Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.1 to the
Company’s current report on Form 8-K filed on February 6, 2023.
Form of Performance Stock Unit Grant Agreement, incorporated by reference to Exhibit 10.2 to
the Company’s current report on Form 8-K filed on February 6, 2023.
• * (10.28)
Form of Non-Qualified Stock Option Grant Agreement, for Directors.
• * (10.29)
Form of Restricted Stock Unit Grant Agreement, for Directors.
* (10.30)
Church & Dwight Co., Inc. Third Amended and Restated Annual Incentive Plan, incorporated by
reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on December 6,
2018.
101
* (10.31)
* (10.32)
* (10.33)
* (10.34)
Employment Agreement, dated October 31, 2011, by and between the Company and Patrick de
Maynadier, incorporated by reference to Exhibit 10.18 to the Company’s annual report on Form
10-K for the year ended December 31, 2011.
Employment Agreement, dated August 23, 2006, by and between the Company and Matthew T.
Farrell, incorporated by reference to Exhibit 10.1 to the Company’s quarterly report on Form 10-Q
for the quarter ended September 29, 2006.
Amended and Restated Change in Control and Severance Agreement, entered into by and between
the Company and Matthew T. Farrell, incorporated by reference to Exhibit 10.1 to the Company’s
current report on Form 8-K filed on February 2, 2016.
Form of Amended and Restated Change in Control and Severance Agreement entered into by and
between the Company and each of the senior executive officers (other than Matthew T. Farrell),
incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed on
February 2, 2016.
* (10.35)
Employment Agreement, dated September 4, 2021, by and between the Company and Barry
Bruno incorporated by reference to Exhibit 10.21 to the Company’s annual report on Form 10-K
for the year ended December 31, 2021.
(10.36)
Lease Agreement (Build to Suit), dated July 20, 2011, between Church & Dwight Co., Inc. and
CD 95 L.L.C., incorporated by reference to Exhibit 10.1 to the Company’s quarterly report on
Form 10-Q for the quarter ended September 30, 2011.
•
•
•
•
•
•
(21)
(23)
(31.1)
(31.2)
(32.1)
(32.2)
List of the Company’s subsidiaries.
Consent of Independent Registered Public Accounting Firm.
Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) under the
Securities Exchange Act.
Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) under the
Securities Exchange Act.
Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(b) under the
Exchange Act and 18 U.S.C. Section 1350.
Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(b) under the
Exchange Act and 18 U.S.C. Section 1350.
(101.INS)
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document.
(101.SCH) Inline XBRL Taxonomy Extension Schema Document.
(101.CAL) Inline XBRL Taxonomy Extension Calculation Linkbase Document.
(101.DEF) Inline XBRL Taxonomy Extension Definition Linkbase Document.
(101.LAB) Inline XBRL Taxonomy Extension Label Linkbase Document.
(101.PRE) Inline XBRL Taxonomy Extension Presentation Linkbase Document.
(104)
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
•
*
Indicates documents filed herewith.
Constitutes management contract or compensatory plan or arrangement required to be filed as an exhibit to
this Annual Report.
ITEM 16. FORM 10-K SUMMARY
None.
102
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on
February 16, 2023.
CHURCH & DWIGHT CO., INC.
By:
/s/ Matthew T. Farrell
MATTHEW T. FARRELL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
103
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below
by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Matthew T. Farrell
Matthew T. Farrell
/s/
Bradlen S. Cashaw
Bradlen S. Cashaw
/s/
/s/
James R. Craigie
James R. Craigie
Bradley C. Irwin
Bradley C. Irwin
/s/
Penry W. Price
Penry W. Price
/s/
Susan G. Saideman
Susan G. Saideman
/s/
Ravichandra K. Saligram
Ravichandra K. Saligram
/s/
Robert K. Shearer
Robert K. Shearer
/s/
Janet S. Vergis
Janet S. Vergis
/s/
Arthur B. Winkleblack
Arthur B. Winkleblack
/s/
Laurie J. Yoler
Laurie J. Yoler
/s/
Richard A. Dierker
Richard A. Dierker
Chairman, President and Chief
Executive Officer, Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Director
February 16, 2023
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
February 16, 2023
/s/
Joseph J. Longo
Joseph J. Longo
Vice President and Controller
(Principal Accounting Officer)
February 16, 2023
104
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
SCHEDULE II—Valuation and Qualifying Accounts
For each of the three years in the period ended December 31, 2022
(Dollars in millions)
Additions
Deductions
Beginning
Balance
Charged
to
Expenses Acquired
Amounts
Written
Off
Foreign
Exchange
Ending
Balance
Allowance for Doubtful Accounts
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for Cash Discounts
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales Returns and Allowances
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5.5
3.7
2.4
$ 5.9
6.0
5.1
$32.4
24.5
13.0
$
0.4
0.6
1.4
$106.0
98.4
96.0
$128.5
129.4
110.9
$0.0
1.9
0.0
$0.0
0.0
0.4
$0.0
0.0
0.4
$
(2.4)
(0.7)
(0.1)
$(105.2)
(98.5)
(95.5)
$(126.0)
(121.5)
(99.8)
$ 0.0
0.0
0.0
$(0.1)
0.0
0.0
$(0.1)
0.0
0.0
$ 3.5
5.5
3.7
$ 6.6
5.9
6.0
$34.8
32.4
24.5
105
[THIS PAGE INTENTIONALLY LEFT BLANK]
I, Matthew T. Farrell, certify that:
CERTIFICATIONS
EXHIBIT 31.1
1.
I have reviewed this annual report on Form 10-K of Church & Dwight Co., Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of any material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on our evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 16, 2023
/s/ Matthew T. Farrell
Matthew T. Farrell
President and Chief Executive Officer
I, Richard A. Dierker, certify that:
CERTIFICATIONS
EXHIBIT 31.2
1.
I have reviewed this annual report on Form 10-K of Church & Dwight Co., Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of any material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on our evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 16, 2023
/s/ Richard A. Dierker
Richard A. Dierker
Executive Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350
EXHIBIT 32.1
I, Matthew T. Farrell, President and Chief Executive Officer of Church & Dwight Co., Inc. (the
“Company”), hereby certify that, based on my knowledge:
1. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
By: /s/ Matthew T. Farrell
Matthew T. Farrell
President and Chief Executive Officer
Dated: February 16, 2023
CERTIFICATION PURSUANT TO
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350
EXHIBIT 32.2
I, Richard A. Dierker, Executive Vice President and Chief Financial Officer of Church & Dwight Co., Inc.
(the “Company”), hereby certify that, based on my knowledge:
1. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
By: /s/ Richard A. Dierker
Richard A. Dierker
Executive Vice President and Chief Financial Officer
Dated: February 16, 2023
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Stockholder Inquiries
Communications concerning
stockholder records, stock
transfer, changes of ownership,
account consolidations, dividends
and change of address should be
directed to:
Church & Dwight Co., Inc.
Computershare Inc.
Stockholder Relations
866.299.4219
Stockholder correspondence
should be mailed to:
Church & Dwight Co., Inc.
Computershare
P.O. BOX 30170
College Station, TX 77842-3170
Overnight correspondence
should be sent to:
Church & Dwight Co., Inc.
Computershare
211 Quality Circle, Suite 210
College Station, TX 77845
www.computershare.com/investor
Dividend Reinvestment Plan
Computershare Trust Company, N.A.
administers a dividend reinvestment
and stock purchase plan for our
Stockholders.
For details, contact:
Dividend Reinvestment Plan
Church & Dwight Co., Inc.
Computershare Trust Company, N.A.
250 Royall Street, Canton, MA
02021
866.299.4219
The virtual annual meeting of
stockholders will be held at:
12:00 P.M. Thursday, April 27, 2023
New York Stock
Exchange Certification
Our Chief Executive Officer has
provided the required annual
certification to the New York
Stock Exchange.
Investor Information
Corporate Headquarters
Church & Dwight Co., Inc.
Princeton South Corporate Park
500 Charles Ewing Blvd.,
Ewing, New Jersey 08628
609.806.1200
Corporate Website:
www.churchdwight.com
Independent Registered
Public Accounting Firm
Deloitte & Touche LLP
100 Kimball Drive
Parsippany, NJ 07054
Transfer Agent and Registrar
Computershare Inc.
250 Royall Street
Canton, MA 02021
866.299.4219
Stock Listing
Church & Dwight Co., Inc. shares
are listed on the New York Stock
Exchange. The symbol is CHD.
10-K Report
Stockholders may obtain a copy of
the Company’s Annual Report on
Form 10-K for the year ended
12/31/22 filed with the Securities
and Exchange Commission by
writing to the Secretary at
Corporate Headquarters.
Cautionary Note On Forward-Looking Information:
This Annual Report contains forward-looking statements which are based on current assumptions that are subject to risks
and uncertainties that may cause actual results to differ materially from the forward-looking statements, including the risks
and uncertainties discussed on pages 14-33 of this Annual Report. The Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as
required by law.
®Church & Dwight Co., Inc. 2023
CHURCH & DWIGHT CO., INC.
—
Princeton South Corporate Center
500 Charles Ewing Boulevard
Ewing, NJ 08628
www.churchdwight.com
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