Church & Dwight Co., Inc. (NYSE:CHD) Q2 2023 Earnings Call Transcript

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Bryan Adams: Okay. Great. And then just one more quick one on specialty products. I think entering the quarter, the expectation was for that business to be slightly negative this year, and you’ve had another choppy quarter here. I know you called out the reasons why with the lower price import. I think on par from an expert on the puts and take of the business here. But just looking ahead, should we expect kind of a similarly challenged backdrop as we head into the second half? Are you expecting any improvement here? Thanks.

Rick Dierker: Yes. I’ll give you the division kind of organic outlook here we are in July, so approximately 5% for domestic, 6% to 7% for international and negative for SPD. And that gets us to approximately 5%. So we continue to think we will have the same issue that we experienced in Q2 for the balance of the year.

Bryan Adams: Awesome. Thanks, Rick. Thanks, Matt.

Operator: Your next question comes from Lauren Lieberman from Barclays. Please go ahead.

Lauren Lieberman: Great, thanks. Good morning. I just want to maybe try to ask a bit of a longer term question, which is that now, it feels you’ve got really good visibility into gross margin recovery to pre-COVID levels, through the worst in terms of kind of the discretionary driven volatility on top line, and with all of that reinvestment set up to get back to not quite 12%, but a huge step change this year. Now the things are kind of more settled, if you will. You also talked about some incremental investments in efficiency. And so I was wondering if we could just hear a little bit about kind of longer range planning as you think about investments in capabilities, in supply chain, which I know we’ve talked about in pieces, but if you kind of think over a multi-year view, perhaps how you think about investments that you may want to be making more in kind of infrastructure to support the business with the hindsight being 2020 of some of the operational headwinds that you ultimately faced during the global pandemic that nobody could have planned for.

Thanks.

Matt Farrell: Yes. It’s a good question. Hey, you’ve heard us say in the past that we think that sales per employee is an underappreciated measurement of a company’s performance. But we focus on that quite a bit. And Rick can kind of chime in with some details, but we look at how do we make our people and the plants more efficient through automation, and how do we do the same with respect to the white collar office workers. We have – we’re going to be close to $6 billion in sales next year we got around 5,000, it’s 5,200 or 5,300 employees. And the goal here is can you continue to grow your top line without necessarily growing the number of plants that you have or the number of employees that you have to make the team far more efficient.

But Rick can give you a couple of examples of RPA in the number of projects we’ve done in the past, how many we plan to do this year and in the future as an example of how you try to make your certainly your office workers more productive. And of course, we like so many other companies out there are now looking to AI and chat and say, well, how can we leverage that to make everybody more productive? But Rick, you can throw a few examples on the table.

Rick Dierker: Yes. So it’s all in the backdrop of making sure that our evergreen model of 25 basis points of SG&A leverage each and every year is solid for the next five, 10 years. And so two examples, like one Matt mentioned is like RPA. So one of the investments we’re making right now with automation and technology is, we have 20 or 30 projects that represents thousands and thousands of hours that we’re automating. And that way that our people have more capacity to do other work, which is really impactful as we build the company. And we have more and more brands every day. The second one we’re doing is we’re making significant technology investments. I think you’ve heard us talk about before, but we put an ERP system into China, as an example, we’re investing into an ERP system for our GMG business, which is our fastest growing international business.

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