Church & Dwight Co. Inc. (CHD), a leading consumer products company, posted fourth-quarter 2011 earnings of 53 cents a share, beating the Zacks Consensus Estimate by couple of cents. The reported earnings were up 23% from 43 cents earned in the prior-year quarter.

Including one time items, earnings per share jumped 38% to 44 cents compared with 32 cents reported in the prior-year quarter.

The company’s top line increased 11.3% to $731.1 million for the fourth quarter of fiscal 2011, reflecting a 7.1% rise in organic sales. The increase in organic sales represents a 5.4% growth in volume coupled with 1.7% positive effect of pricing. The reported revenue also came ahead of the Zacks Consensus Revenue Estimate of $693 million.

Segment & Margin Details

Consumer Domestic net sales increased 10% to $519.6 million driven by increases in household products, which marked an increase of 16.1% in revenue to $342.8 million, partially offset by 0.3% decrease in personal care products.

On an organic basis, sales grew 7.4% during the quarter reflecting higher sales of ARM & HAMMER Liquid and Powder Laundry Detergents, ARM & HAMMER Cat Litter, XTRA Liquid Laundry Detergent and ARM & HAMMER SPINBRUSH battery powered toothbrushes. This was, however, partially offset by sluggish sales of OXICLEAN laundry additive and ARM & HAMMER Dental Care Toothpaste.

Increases in organic growth represent a 6.6% increase in volume, while positive pricing contributed 0.8%.

Consumer International sales jumped 20.7% during the quarter to $145 million. On an organic basis, sales rose 6.2% as Australia, Mexico and Canada experienced higher sales along with a rise in exports.

Specialty Products sales increased 3.8% to $66.5 million. Moreover, on an organic basis, sales increased 6.4%, reflecting sales growth in animal nutrition business.

Gross profit increased 8.2% to $316.5 million compared with $292.5 million in the prior- year quarter. However, gross margin contracted 120 basis points to 43.3%, reflecting adverse product mix and increased commodity cost, partly offset by operating efficiency and cost reductions.

Operating income increased 12.5% to 117.4 million $104.4 million. Moreover, operating margin expanded 20 basis points to 16.1% during the quarter.

Other Financial Details

Church & Dwight, which faces stiff competition from Clorox Corporation (CLX), ended the quarter with cash and cash equivalents of $251.4 million, long-term debt of $249.7 million and shareholders’ equity of $2,040.7 million.

On February 1, 2012, Church & Dwight announced a 41% increase in its quarterly dividend to 24 cents from 17 cents. The increased dividend marks the company’s 444th regular consecutive quarterly dividend. The announced quarterly dividend will be paid on March 1, 2012.

The company generated a free cash flow of $361 million in fiscal 2011 with capital expenditures of $77 million.

Guidance

Benefiting from solid organic sales and healthy pricing, management expects earnings to be in the range of $2.41 to $2.43 per share in fiscal 2012, reflecting an increase of 9%-10%, excluding charges of 9 cents related to deferred tax valuation in 2011.

The company forecasts an organic sales growth of 3%-4% in fiscal 2012, while gross margin is expected to expand by 25-50 basis points.

Church & Dwight maintains a Zacks #3 Rank, which translates into a short-term Hold rating.

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