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  "docSlug": "8b6a62f49fba",
  "documentTitle": "Church & Dwight Co., Inc. (CHD)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-09-05 00:00:00",
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  "pageNumber": 24,
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  "notes": "Uses a quote from a 2015 conference call to highlight management's initial transparency versus later obfuscation.",
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      "kind": "callout",
      "text": "Free cash flow conversions, 125% in 2015, average for the last five years, 119%; so just stellar result. We did dip our toe in the water in 2015 on AR factoring, so that isn't 125%. If we take that out, we're still at 119%.",
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      "text": "FCF / Adj. Net Income: 117%",
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      "text": "CHD has not been fully transparent about its accounts receivable factoring program. At first in 2015, it admitted that cash flow should be adjusted for the factoring. As program usage intensified, management stopped calling out the impact of factoring, and kept proclaiming working capital improvements and impressive cash flow growth. In May 2019, management increased the size of the facility from $150 to $250m, but buried the detail in an 8-K and didn't mention the increased capacity in the 10-Qs(1). Management also does not provide quarterly detail about its factoring, opting instead to disclose program usage annually.",
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      "text": "Free cash flow conversions, 125% in 2015, average for the last five years, 119%; so just stellar result. We did dip our toe in the water in 2015 on AR factoring, so that isn't 125%. If we take that out, we're still at 119%. — CFO Q4'2015 Conf Call",
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      "text": "1) 8-K Source: CHD",
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      "kind": "table",
      "text": "Fiscal Year, Free Cash Flow, Adj. Net Income (NI), FCF / Adj. Net Income, AR Factored, Adj. FCF, Spruce Pt Adj. FCF / Ad. NI",
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      "kind": "title",
      "text": "Greater Factoring = Weaker Cash Flow",
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      "evidence": "The document extensively details the problems with CHD, including rising debt, low-quality EBITDA, worrisome strategy shifts, and concerning CEO history.",
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      "evidence": "The overall thesis implies that failing to act on Spruce Point's analysis could lead to significant financial losses for investors holding onto CHD stock.",
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      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
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