{
  "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": 65,
  "pageCount": 92,
  "prevPage": 64,
  "nextPage": 66,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 3,
  "notes": "The slide uses a structured list format to present evidence of control across four categories: Management, Location, Legal/Board, and Customer.",
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  "slideHref": "/slides/019dd923-622c-750b-8b98-c3e7825e1948/65",
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  "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-c3e7825e1948#slide-65",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "Spruce Point believes CHD effectively controls Armand Products and is using the entity to inflate key financial metrics (gross margin, free cash flow, and working capital).",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
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      "kind": "list",
      "text": "The Company Location: The President of the Company is located in CHD’s corporate office in Princeton, NJ. This provides strong evidence that daily operation and oversight is squarely in control by CHD.",
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      "kind": "list",
      "text": "The Customer: By Spruce Point’s estimate, CHD is major customer of Armand Products, potentially at substantially off-market prices. Many years ago, CHD provided financials for Armand, but ceased in 1999. It warned that the financials might not reflect reality since products and services provided to it were at cost. The current President’s biography boasts Armand has ~$100m of revenues. Based on purchasing disclosures in the past few years, we estimate 15% – 25% of Armand’s sales are to CHD.",
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      "kind": "list",
      "text": "The Management And Employees: Armand Products does not appear to have any employees. The sales are conducted by various CHD employees in different geographic territories. The technical support is provided by two employees with an OXY email address. The only current executive Spruce Point identified is the President, who is a long-time CHD employee. CHD receives an annual management and administrative fee that it uses to reduce SG&A. The fee has gone up every year, even as evidence points to substantial margin erosion.",
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      },
      "kind": "list",
      "text": "The Legal Structure / Board: Armand Products is just its business operating name. The Company’s legal name has been Church & Dwight (C&D) Chemical Products, Inc. and was a listed subsidiary of CHD (now obscured). We sourced formation documents in Alabama from 1987, and find that from inception, all the Directors and Management were listed as Church & Dwight executives.",
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      "kind": "paragraph",
      "text": "Spruce Point believes CHD effectively controls Armand Products and is using the entity to inflate key financial metrics (gross margin, free cash flow, and working capital). CHD applies “Equity Method” accounting and runs 50% of the Company’s income below the line. However, there is evidence that suggests CHD effectively controls the business. Control is a key accounting concept that drives the consolidation determination.",
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      },
      "kind": "title",
      "text": "Shady Armand Products JV",
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  "metrics": [],
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  "frameworks": [
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      "name": "fraud-exposure",
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      "matchId": "be295a13-bab6-4238-b412-a0151b9f7145",
      "evidence": "The slide systematically presents evidence of accounting manipulation and lack of independence to expose potential fraud.",
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  "loops": [
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      "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"
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