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  "docId": "019dd923-622c-750b-8b98-c3e7825e1948",
  "docSlug": "8b6a62f49fba",
  "documentTitle": "Church & Dwight Co., Inc. (CHD)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-09-05 00:00:00",
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  "pageNumber": 43,
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  "notes": "Uses red lines to visually connect the analyst question to the CFO response, and then to the contradictory text blocks.",
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      "kind": "callout",
      "text": "Yeah. Only good surprises. Really it's a terrific business. We expected 15-plus percent sales growth and we should easily exceed that target in 2019.",
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      "text": "Okay. Great. And then my final question on the FLAWLESS acquisition now that you've owned it a few months any surprises as far in what you're seeing in the business?",
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      "kind": "callout",
      "text": "There is evidence that CHD is stretching the truth about the performance of FLAWLESS. When asked directly about any surprises, the CFO said \"only good surprises\". However, the evidence contradicts this with the integration taking longer than expected by a revision in the 10-Q.",
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      "kind": "paragraph",
      "text": "There is evidence that CHD is stretching the truth about the performance of FLAWLESS. When asked directly about any surprises, the CFO said \"only good surprises\". However, the evidence contradicts this with the integration taking longer than expected by a revision in the 10-Q. How can this be characterized as positive?",
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      "text": "Yeah. Only good surprises. Really it's a terrific business. We expected 15-plus percent sales growth and we should easily exceed that target in 2019. — Rick Dierker, CFO",
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      "kind": "source-note",
      "text": "Source: CHD Q1 2019 10-Q, May 2, 2019",
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      "kind": "source-note",
      "text": "Source: CHD Q2 2019 10-Q, July 31, 2019",
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      "text": "Then Three Months Later: Five Month Integration..... On May 1, 2019, the Company closed on its previously announced acquisition of the FLAWLESS™ and FINISHING TOUCH™ hair removal business (the \"Flawless Acquisition\") from Ideavillage Products Corporation (\"Ideavillage\"). The Company paid $475.0 at closing and will make an additional earn-out payment up to a maximum of $425.0 in cash, based on a trailing twelve-month net sales target ending no later than December 31, 2021. The transaction was funded with a three-year term loan and commercial paper borrowings. The Company anticipates there will be a five-month integration transition period in which the net cash received from Ideavillage will be accounted for as other revenue as a component of net sales. The Company will purchase the inventory following the transition period. FLAWLESS is managed in the Consumer Domestic and Consumer International segments and represents an addition to our specialty haircare portfolio which includes BATISTE dry shampoo, VIVISCAL hair thinning supplements, and TOPPIK hair fibers.",
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      "text": "Four Month Integration..... On May 1, 2019, the Company closed on its previously announced acquisition of the FLAWLESS™ and FINISHING TOUCH™ hair removal business (the \"Flawless Acquisition\") from Ideavillage Products Corporation. The Company paid $475.0 at closing and will make an additional earn-out payment up to a maximum of $425.0 in cash, based on a trailing twelve-month net sales target ending no later than December 31, 2021. The transaction was funded with a three-year term loan and commercial paper borrowings. The Company anticipates there will be a four-month integration transition period in which the net cash received from Ideavillage will be accounted for as other revenue as a component of net sales. The Company will purchase the inventory following the transition period. FLAWLESS is managed in the Consumer Domestic and Consumer International segments and represents an addition to our specialty haircare portfolio which includes BATISTE dry shampoo, VIVISCAL hair thinning supplements, and TOPPIK hair fibers.",
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      "kind": "title",
      "text": "CFO Spinning Half-Truths",
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      "evidence": "Contrasting public executive statements with regulatory filings.",
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      "name": "Cost Of Inaction",
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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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