Church & Dwight delivered substantially stronger underlying growth than its reported second-quarter sales increase suggested, as higher volumes, favorable pricing and product mix, innovation, and international expansion offset the effect of businesses exited through its 2025 portfolio strategy.
Net sales increased 1.6% to $1.53 billion, exceeding management’s forecast for a 1% decline.
Organic sales increased 5.8%, significantly above the company’s outlook of approximately 3%. The organic increase included 4.3% volume growth and a 1.5% contribution from pricing and product mix.
The large gap between reported and organic growth resulted primarily from Church & Dwight’s strategic portfolio actions.
Divestitures and business exits reduced reported growth by 7.4 percentage points during the quarter. Acquisitions added 2.8 percentage points, while the foreign-exchange and other reconciliation reduced the organic growth calculation by 0.4 percentage points.
The results show that Church & Dwight’s continuing brands expanded at a much faster rate than the companywide headline figure.
Consumer Domestic sales were approximately unchanged at $1.16 billion, increasing only 0.1% on a reported basis. However, domestic organic sales increased 5.1%, including 3.6% volume growth and 1.5% from pricing and product mix.
TheraBreath mouthwash and toothpaste, Hero, Arm & Hammer cat litter, and Zicam were among the primary contributors to domestic growth.
The domestic comparison included sales from the Touchland and Miss Mouth’s acquisitions, offset by the businesses affected by Church & Dwight’s earlier portfolio actions.
International operations generated the company’s fastest divisional growth.
Consumer International sales increased 7.2% to $297.5 million, while organic sales rose 9.1%.
International volume increased 7.3%, and pricing and product mix contributed another 1.8%. TheraBreath, Hero, and Batiste drove much of the growth.
The Specialty Products division generated $76.7 million in sales, increasing 2.8% on both a reported and organic basis.
Specialty Products volume rose 1.3%, while pricing and mix contributed 1.5%.
Church & Dwight’s digital business also continued expanding faster than the broader company.
Global e-commerce sales increased 22.7% and represented 25.5% of total consumer sales. The result means approximately one-quarter of the company’s consumer business is now generated online.
The company added another digitally oriented brand during June through its acquisition of Miss Mouth’s Messy Eater.
Church & Dwight described Miss Mouth’s as the leading stain-remover brand on Amazon and said the business produced encouraging initial sales following the acquisition.
Management expects Miss Mouth’s to support growth during the next 12 to 18 months.
The acquisition follows Church & Dwight’s strategy of purchasing fast-growing consumable brands that can benefit from its retail distribution, marketing resources, and e-commerce capabilities.
Innovation also contributed materially to the quarter.
Church & Dwight expects new product introductions to generate approximately half of its organic growth during 2026. The company is launching products across TheraBreath, Arm & Hammer, Hero, and other brands.
TheraBreath expanded its toothpaste line and launched Complete Revitalizing Mint mouthwash and portable rinse sachets.
Arm & Hammer introduced Dual Defense cat litter with Microban antimicrobial product protection, while Hero expanded into facial cleansers and launched its Mighty Shield liquid blemish patch.
Gross profit increased to $693.9 million from $647 million.
Reported gross margin expanded 240 basis points to 45.4%. However, adjusted gross margin increased by a more modest 40 basis points because the prior-year reported comparison included business-exit-related charges.
Adjusted gross-margin improvement reflected higher sales volume, productivity, and a more favorable product mix associated with acquisitions and portfolio actions.
Those benefits were partly offset by inflation and higher transportation expenses.
Church & Dwight reinvested a meaningful portion of the sales and gross-margin improvement in marketing.
Marketing expense increased by $8.2 million to $165.3 million. Marketing represented 10.8% of sales, increasing 40 basis points from the prior-year period.
Selling, general, and administrative expense increased to $252.2 million from $228.2 million.
The latest quarter included $6.3 million of restricted-stock charges related to the Touchland acquisition.
Adjusted SG&A reached $241.4 million, or 15.8% of sales, representing an increase of 220 basis points. Church & Dwight attributed the increase primarily to Touchland amortization and operating expenses.
Higher marketing and SG&A expenses more than offset the benefit from organic growth and adjusted gross-margin expansion.
Adjusted operating income declined by $28.7 million to $287.2 million. Adjusted operating margin contracted 220 basis points to 18.8%.
Reported operating income increased to $276.4 million from $261.7 million, while reported operating margin improved to 18.1% from 17.5%.
The contrast reflects unusual costs in the prior-year reported comparison and current adjustments associated with Touchland restricted stock and Church & Dwight’s enterprise resource planning project.
Reported net income increased to $202.8 million from $191 million.
Diluted reported earnings per share increased 9% to $0.85 from $0.78. A lower share count also supported per-share growth, with diluted shares declining to 238.2 million from 246.4 million.
Adjusted net income declined to $212.5 million from $232.3 million, and adjusted diluted earnings per share fell 5.3% to $0.89 from $0.94.
The results show that Church & Dwight’s underlying earnings declined despite strong organic sales growth because of higher marketing, acquisition-related, and administrative expenses.
Cash generation remained strong.
Operating cash flow reached $286.8 million during the quarter, increasing 24.3%.
For the first six months, operating cash flow increased 10.8% to $461.6 million from $416.5 million.
Inventory used $65.4 million of cash during the first half, compared with only $2.9 million a year earlier.
Inventory increased to $601.9 million at the end of June from $534.8 million at the end of 2025, reflecting investments supporting sales growth, acquisitions, and new product launches.
Church & Dwight spent $300 million on an acquisition and another $180.5 million on acquisition-related liabilities during the first half.
The company did not repurchase shares, compared with $300 million of repurchases during the first six months of 2025.
Cash and cash equivalents declined to $254.8 million from $409 million at the end of 2025. Total debt was approximately $2.3 billion, including $49.9 million of short-term borrowings.
The stronger-than-expected quarter prompted Church & Dwight to raise its full-year outlook.
Organic sales are now expected to increase between 4% and 5%, compared with the previous forecast of 3% to 4%.
Reported sales are projected to range from approximately flat to 1% growth, an improvement from the prior expectation for a decline of between 0.5% and 1.5%.
Adjusted gross margin is expected to expand between 100 and 120 basis points.
The company expects volume growth, productivity, and favorable portfolio mix to offset inflation, transportation costs, and tariffs.
Church & Dwight also expects to receive approximately $15 million of additional tariff refunds during the second half.
Rather than retaining the refund entirely as profit, management plans to reinvest the funds in consumer-facing initiatives and use a portion to offset inflationary pressures.
Full-year adjusted earnings per share are expected to increase between 6% and 8%, compared with the previous range of 5% to 8%.
Reported earnings per share are expected to increase between 20% and 22%, while operating cash flow is projected to reach approximately $1.18 billion.
Church & Dwight expects third-quarter organic sales growth of approximately 3%, but reported sales are projected to decline approximately 1% entirely because of the strategic portfolio actions completed in 2025.
Marketing spending is expected to increase sequentially to approximately 12% of sales, while adjusted earnings per share are projected to increase 10% to approximately $0.89.
The second-quarter results demonstrate that Church & Dwight’s continuing brands are expanding meaningfully faster than reported sales.
However, the company is using much of the benefit from stronger volume and gross-margin improvement to fund marketing, digital capabilities, acquisitions, artificial intelligence initiatives, and international expansion.
KEY QUOTES:
“Our power brands continued to perform exceptionally well in a challenging macroeconomic environment, driving a second straight quarter of industry-leading organic sales growth.”
“The strength of our brand portfolio, combined with the strategic portfolio actions we implemented in 2025, has enhanced our focus on our growth initiatives and reinforces our confidence as we enter the second half of 2026.”
Rick Dierker, Chief Executive Officer Of Church & Dwight
