{ "docId": "019dd923-622c-750b-8b98-c3e7825e1948", "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", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 60, "pageCount": 92, "prevPage": 59, "nextPage": 61, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "Uses a series of callout boxes to highlight specific quotes and financial data points.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "screenshot" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-c3e7825e1948/60", "deckHref": "/decks/019dd923-622c-750b-8b98-c3e7825e1948", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-c3e7825e1948.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-c3e7825e1948#slide-60", "components": [ { "bbox": { "h": 0.06, "w": 0.83, "x": 0.148, "y": 0.52 }, "kind": "callout", "text": "Okay. And then if I might on the Waterpik, is Waterpik lower than average margin to the company at the gross level?", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "128b1fe8-8a59-4fbf-ac9d-a95893f220a5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.075, "w": 0.83, "x": 0.148, "y": 0.61 }, "kind": "callout", "text": "No, it's not. Gross margins are on par with the company. Now, with tariffs, it's a few hundred basis points lower than the company margin, but normal gross margins are on par with the company", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9c6f287c-1516-4f8b-8a59-a7555bab50f9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.11, "w": 0.83, "x": 0.148, "y": 0.405 }, "kind": "callout", "text": "So, we've said most of the $10 million is around COGS synergies. So, we would expect gross margin to expand 200 basis points to 300 basis points over the next few years.... we've always – we've never been disappointed, and we've always overachieved our synergy number. And I'll probably leave it at that", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c57cb823-df57-4974-9fdb-aed4b649efd3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.085, "w": 0.83, "x": 0.148, "y": 0.295 }, "kind": "callout", "text": "Consistent with our acquisition model criteria, Waterpik is expected to grow faster than 3% evergreen target, and has accretive gross margins at approximately 46%", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d92b9fc6-cf10-4510-9710-3676c5ce030e", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "Documents show Waterpik’s gross margins were 47.7% - 49.1% pre-acquisition, and the CFO said he expected 200 - 300bp gross margin expansion. Fast forward to early 2019, the CFO’s recent comment that gross margins are now “on par” with the company’s gross margin (pre-tariff), indicate that margins have contracted lower in this product line closer to 44% - and this even after price increases announced in Q3 2018!", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-1ac2-71b6-bf55-8154a3871a2a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.83, "x": 0.148, "y": 0.705 }, "kind": "image", "text": "Financial tables showing 47.7% and 49.1% margins", "attrs": null, "subkind": "screenshot", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "367a5959-15ea-4359-aea5-2a72b5275233", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "gross margin: 44%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-1ac2-71b6-bf55-88e3c5bfc744", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.085, "w": 0.95, "x": 0.025, "y": 0.165 }, "kind": "paragraph", "text": "Documents show Waterpik's gross margins were 47.7% - 49.1% pre-acquisition, and the CFO said he expected 200 - 300bp gross margin expansion. Fast forward to early 2019, the CFO's recent comment that gross margins are now \"on par\" with the company's gross margin (pre-tariff), indicate that margins have contracted lower in this product line closer to 44% - and this even after price increases announced in Q3 2018!", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9a42e14f-017e-43f2-9c8e-f5cc8cea7206", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "So, we’ve said most of the $10 million is around COGS synergies. So, we would expect gross margin to expand 200 basis points to 300 basis points over the next few years.... we’ve always – we’ve never been disappointed, and we’ve always overachieved our synergy number. And I’ll probably leave it at that — CEO Waterpik Deal Call, July 2017", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-1ac2-71b6-bf55-84574bf277a9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.05, "x": 0.148, "y": 0.97 }, "kind": "source-note", "text": "Source: 8-K", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c92b886e-779d-4531-8c02-5a1847ce21ce", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.055, "w": 0.605, "x": 0.308, "y": 0.045 }, "kind": "title", "text": "Evidence of Waterpik Margin Erosion", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "82f1c394-03e2-4959-b728-241b41f12515", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "52b70041-1b7b-4ec7-9eba-1f1c1dd74782", "evidence": "Contrasting CFO quotes with subsequent financial performance data", "confidence": 0.9 } ], "arcBeats": [], "loops": [ { "to": 92, "from": 1, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "d8d41695-ad33-43d2-9478-d227476d9e68", "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.", "position": 2, "objective": "The cost of not selling CHD", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }