Church & Dwight Co., Inc.
Q4 2012 Earnings Call Transcript

Published: 6 Feb 2013

[Matthew Farrell:]

Okay we are going to wrap it up now. So you know our long-term algorithm for organic sales growth is 3% to 4%, we are calling that again in 2013. As I said before we have three divisions, Domestic, International and Specialty products, so all three divisions we expect to be within that range. Our gross margin, you should all think of 2013 as a reset year for us. So we just required a business that has lower than company average gross margins. So we have four quarters that I have baked into our numbers into 2013. But keep in mind as we said in our release that we expect our existing business, base business to expand its gross margin 25 to 50 basis points. One of the things too is we about 60% of our most volatile commodity hedged as of today, so it again increases our confidence and our ability to hit that number on a full year basis. And then marketing, again, it's a kind of reset year for us and we’ve got four quarters of the gummy vitamin business. As you know it had historically a lower spend as a percentage of sales. We said we are going to take that up at not as high as necessarily through our other businesses. And the thing we watch most closely is share voice versus share market. So we're very, very keen on what is been spend in a particular category and making sure that we are more than competitive with respect to our investment in our brands. And then finally EPS, so you can see we are expecting 14% EPS growth in 2013, and this is a summary page. So 3% to 4% gross margin marketing kind of flattish, but remember as I explained the acquisition had some impact on that. Lots of leverage on SG&A, so round numbers as you know, our long-term algorithm is to expand operating margin 60 basis points, so we expect to do that again in 2013, and you know the rest with our dividend increase today of 17%. We have a dividend yield of about 2%. And this actually 2012 is the 12th consecutive year that Church & Dwight has grown earnings per share of 10% or better and you see the 10 for 20 club there, so our idea there is by 2020 that we would have done it 20 years in a row. So 2013 would be the 13th year that we are shooting for. And now we are ready for questions.

[James Craigie:]

Mr. Smith? I never knew you would need a mic, but go ahead

[Unidentified Analyst:]

Is there a plan to take the whole laundry portfolio to Forex concentrate at some point, so is this kind of a catastrophe how it goes and then ultimately you may want to convert the whole thing?

[James Craigie:]

No it's not a test. We're launching this incrementally into the business, it is eventually the retailers of the world, it’s not they want everybody to go to Forex, we would be perfectly happy taking our whole line. But right now this is between the launch of an incremental effort to our current business and we think about to please consumers tremendously, please retailers and I think as a result they are hopeful the retailers will say why isn’t everything for everybody on a compacted basis.

[Unidentified Analyst:]

Got you and did you say what retailers you are going to expand the distribution in? On the Avid business, is there a game plan to get the gross margin up above corporate averages and then can you just tell us what the business grew this year, because the market is doing pretty great relative to when you bought it, so…

[James Craigie:]

(Inaudible).

[Unidentified Analyst:]

Do you have a growth of the share, I know it’s not a (gag) yet, just a business from that 2011 base…

[James Craigie:]

Double digits on the growth. That’s all I will tell you and we do have a long-term game plan to get it up over the corporate average.

[Unidentified Analyst:]

Great thanks.

[James Craigie:]

(Bower)

[Unidentified Analyst:]

Hi, I don’t think in the press release was a breakout of the – what I would call non-recurring items in the first quarter tied to – could you tell us what they are in terms of inventory step up transition cost and deal cost?

[Matthew Farrell:]

Yeah, there actually no difference than we said previously, so…

[Unidentified Analyst:]

The $0.06?

[Matthew Farrell:]

So the step-up cost were about $7.5 million and transaction costs were $4.5 million. So between two of that’s $12 million, so it’s $0.05 to $0.06.

[Unidentified Analyst:]

And so, I guess in the guidance you said that Avid would had 4% to earnings, but if you just set out its more like 2, right?

[Matthew Farrell:]

Yeah. We don’t think of it that way. So the way we think about it is, Avid was neutral to EPS in the fourth quarter. So, I know we can play games, and say what do we want to take in or out. But, we look at it has the EPS that Avid contributed fourth quarter is no different than if we bought on December 31. So consequently we say, we want everybody to understand this $0.13 of earnings per share in our numbers in 2013.

[James Craigie:]

And don’t forget we told you we are going to at least double marketing spending on Avid. We really, we stepped it up a little in Q4 but really that will take starting this quarter right now. So we are going to be smoothly increase the marketing spending to drive the strong growth here. So you can use Q4 really at the base of what happened because the marketing spending hadn’t fully going to step up here – we have those step up charges and we just got in control of this business as far as distribution. But this will be a double-digit growth on revenues for us. We are going to spend some of that back in the marketing side to drive this business because we just – it’s a long-term tiger by the tail we have here. We wanted to go – we have to get out there and do well as quickly as we can.

[Unidentified Analyst:]

How fast is the kids, vitamin part growing for you?

[James Craigie:]

The kids vitamin part because we are already -- the kids – gummies are already over 50% of the total kid category. We already number one. So the growth there won’t be as much as the adults because we are already a big number one player there in a category that’s already well developed. It’s growing; it will be more I will say mid-single digits. And then the adult side depending on how fast to get the distribution, how fast we drive the growth we definitely be a double digit growth category, how much will depend on, how fast we can get the distribution and spend the marketing dollars and get the trials. Because of the samples – sampling drives this business when you taste this product you are converted on the spot. So we got to do a lot of sampling progress. We will save some time. But, 2013 will be a great year to drive a lot of incremental distribution incremental sampling and then convert all these people to use this long-term especially on the adult side.

[Unidentified Analyst:]

And do you think in your core business that detergents will grow faster than that 3% to 4%?

[James Craigie:]

Yes.

[Unidentified Analyst:]

And the last part is ARM & HAMMER are extra growing faster in 2013 of the two?

[James Craigie:]

Well, it’s had a great year. Both are getting significant incremental distribution, both are great new product launching, we will be supporting those heavily and we had a great in 2012 fastest grower in the entire laundry category in 2012, biggest share gainer in 2012 and with what I know right now in 2013 to be another terrific year. No more, you are done. Next?

[Unidentified Analyst:]

Okay. Thanks. Can you just talk a little bit about the competitive environment, what do you building in for a promotional spending, I know you said there was going to be some sampling on some of the new products but just overall I know you always have a little bit of a gloomy attitude at the beginning of the year and the numbers usually come in better. So…

[James Craigie:]

So you are talking gummies or everything?

[Unidentified Analyst:]

I’m talking everything.

[James Craigie:]

I think it’s a pretty stable comparisons building out there. I think the business environment the economy is just kind of in a lower spin. We have seen every category for the past two years about half up and half have flatter down actually they are continuing. I don’t see any difference. That’s a little optimistic you won’t believe that. I honestly think confidence in this country is starting to turn right now. And confidence always comes before the results. And if you watch what happened in the building industry is having a turnaround. And the building industry usually perceives an economy turnaround because new homes create needs for product in those homes and things like that. So I’m very encouraged to see the new home market picking up in this country and I think that will be the precursor hopefully maybe in 2014 or 2015, nothing will happen so much this year it takes time. But, I love the fact, I’m seeing confidence in the consumer environment, they are starting to build and I hope that continues. I hope double net quits putting us in a crisis mode with these fiscal cliff issues and makes – quits getting everybody else nervous because when consumers get nervous they pull back. So hopefully I can file the budget crisis and look forward and I hope the building industry they continue to improve and maybe in 2014 or 2015 we will see some improvement in the GDP. I think 2013 is another whole year right now. But, I don’t see things getting worse. I don’t see in 2013 getting better. Hopefully I can spend a year from now and hopefully the data will support the beginning – turnaround in this country. So we will see.

[Unidentified Analyst:]

Okay. And then just on the three to four organic, I know you kind of labeled that your assumptions were aggressive but I think achievable is your quote, the three to four I guess, if you think you about you are going to get Avid into the organic sales composition.

[James Craigie:]

No, it’s one quarter.

[Unidentified Analyst:]

By the fourth quarter. You are getting increased distribution, you are already seeing laundry is going to grow faster than the total company. So, again, I understand that’s an ever green target. But, when you flush it out a little bit more, I mean, what could really step…

[James Craigie:]

I said aggressive, but thinking more of the 14% EPS target nobody is going up the 14% in our industry. It’s a tough competitive environment, we got a lot step go out there and we do expect to spend the marketing support to do. So I think very happy, my number one thing is the 14% EPS target. We are going to deliver that heck of a hell in a high water. And if there is competitive issues out there, we will deal with them, but that’s a rougher target nobody, I know is even in double-digit range. So the 10%, I mean, we are 700 basis points above anybody else in this industry as far as EPS growth and I think that’s extremely aggressive given what we face out there. So could we – better 3 to 4, possibly but if we do, we will probably reinvest the money in the business with the marketing spending so I want to exit next year the share growth on leave three quarters of our brands ad maybe strong in the fourth quarter that formula has worked for us consistently. I told you, I will show you numbers that will stay in general our January results were very strong this year, so we are very off to a good start, you always worry; you have a good year and a good quarter. But the inventory loading is something that did not happen and I was gauged by how well January is – and January is off to a very good start. So I’m very encouraged. So we are off to another good year, its one month, but I will take it. And then in the bag, we see what happens ago 11 months ago, I think that’s a very, very positive about 2013 for my company. (inaudible)

[Unidentified Analyst:]

And just a two questions on gross margin, last year, you said you did 30 basis points on the base business and if you are sort of sticking with your long-term 25 to 50 for 2013, you will have a full year of partial compaction. You got a full year of the price increases in (inaudible), you got a full year of Victorville, so why couldn’t we see something better than the 25 to 50 on the base business. And then secondly a little help on the cadence of the gross margin this year because you have obviously got some shifting comparisons in the base period into 12 plus you got Avid.

[Matthew Farrell:]

As far as the comparisons go, my favorable comparisons in the second half, so when you think about 5ish on a full year, you would expect to be down in the first half and up in the second half because Avid obviously we are going to get some of those synergies, $15 million of synergies, most of those come post 2013. But, it’s some coming in the second half of this year. Can we beat the 25 to 50 basis points maybe like Jim said its just like the 3% to 4%. So there is a lot of things that could happen during the year and we do a lot of pluses as well also have we have a lot of dry powder with which to deal with competitors.

[James Craigie:]

Yeah, you are right. We have a lot of things in the pipeline we hope come true but that’s still given where everybody else is these days, that still I think and could target but aggressive target on the core business and the mix claw down from the Avid business. So but we do a lot of good initiatives, we put a lot time last year with the new plants and everything else or even hopefully it will pay off and deliver at least that in 2013. Bill?

[Unidentified Analyst:]

Yes, following up from the gross margin, looking back the last of round of compaction, did you ever quantify or could you quantify what you did to gross margin, I mean, was it 20 basis point, 300 basis points and as we look out this, is it that type of – if it was all implemented again, can you have that type of benefit or is there something we are structurally, a lot of the low hanging fruits are being grabbed?

[James Craigie:]

It’s about 472 time people have asked this for our historical gain (contraction). It was meaningful. It was the single largest product impact on gross margin in my tenure in this company I'll not you what is worth. Now this time (inaudible) on the entire flight. This time is just on the incremental piece. So, it certainly won’t be a big 2013 if not it would be big if the whole business was converting and we hope the retailers of this country receive that, the consumers (inaudible) thumps up and the retailers will then especially the big one out there will get thumps up for the entire industry to those point and let's take this to it. I'm encouraged by Clorox's action on bleach I hope that shows the way because the effort of anything we are the manufacturer do should be to grow a category and the same time bring benefits to consumers that they will appreciate and this effort does and I hope, what we are doing is kind of risky on our part to take the lead but again we did it only by the retailers being non-incremental everybody we'll talk to is willing to do that and add non-incremental to our business and hopefully consumers will start -- will react very strongly. We are going to put some good strong marketing support behind this and I think we are guiding some of the outstanding way of putting the product out there with great package and offering 20% more loads to encourage people to bring the product on and try it. So, we have got great distribution, great displace for comments. Watching this quarter, as we speak you will see it popping up; you will see the commercial start mid to late this quarter and hopefully the results will be great and hopefully it will encourage the entire industry to move with a separate on a complete basis of line.

[Unidentified Analyst:]

And on the distribution gains, I think one of the goals or possibilities out of (inaudible) was to maybe expand distribution on the West Coast and West coast Retailers is that part of what you are talking about in some of the distributions gains or is this still too early?

[James Craigie:]

Yes of course, we had already been expanding on the (inaudible) West Coast and (inaudible) lot of money to ship out to some major accounts out there. So look our games, there is nothing significantly different than games in the West Coast and elsewhere because now we can ship it out there a lot less. So, yes, we have had major gains in West Coast accounts are doing very well out there in fact I'll have to check with Mr. Tursi but I believe we are the number one laundry brand and one of the major accounts in the West Coast right now certainly by far the more value brand out there. So, being able to shift a lot less distance so these accounts was going to is the reason we built (inaudible) plant. We are working so much the plant Pennsylvania, Pennsylvania was more from a processing basis because our previous plant was all just (inaudible) and that we made a very streamline plant that was all savings about processing and making the product. The Victorville plant was more of a case of saving logistics that. So, it would benefit us from having the -- much savings on the two heaviest products we make laundry detergent and cat litter. Next now he is going to be careful of caladium red.

[Unidentified Analyst:]

What was the interest expense and why don't you to break it out and what are your plans for the balance sheet for next year?

[Matthew Farrell:]

We actually do breakout interest expense when we file the 10-K you will see it. We typically do not do that in the Qs. For your interest expense for the company was $14 million probably you want to figure this out on your own, but next year it’s going to be around 26. So, it'd be $12 million incrementally year-over-year. Often it’s worth knowing with respect to other income as also our JV income. So, in 2012, I think it was $9 million, the expectation for next year is $7 million. That also a herd as well. So, those together that $14 million year-over-year. I like to brag too the money we had to borrow to buy Avid acquisition, my finance set a record on Wall Street ever for a company at our rating level, correct?

[Unidentified Company Speaker:]

Yeah, for 10-year money, yeah, BBB rated.

[Unidentified Company Speaker:]

This goes to show the confidence that Wall Street has and investors have in us being able to pay off our debt and [Technical Difficulty] I'm sorry, I can't hear you.

[Unidentified Analyst:]

Plan to pay off any of it in '13 or what's the schedule?

[Matthew Farrell:]

We certainly have the free cash flow to do that, so that would be an option.

[Unidentified Analyst:]

First question on the international margins, I think you've seen sort of an outsized, if you will, EBIT margin expansion in the international business. Is that just a function of scale? And going forward, will the international business continue to close the gap with the domestic business or can you talk about that directionally? And then, can you clarify sort of specifically your strategy with respect to Pods, I mean, God forbid you're wrong and Pods continue to do well over Tide, is that a segment of the category you just don't want to play in or even continue to invest behind it?

[James Craigie:]

Yeah, thank you (inaudible), very good. I'll take the second part of the (inaudible) expect for the margins. No, Pods is a very great product out there. We support it, we want (inaudible), we were first in the marketplace with our product. Over the course of a whole year we've got a fair share of the product out there. We're happy with it. We a little cautionary in Q4 we did expect those consumer issues with the Pods out there and we kind of pulled back the marketing support. It's sort of reality as to whether or not this product was going to face any potential recalls or anything because of the consumer news. So, our share of the market in the fourth quarter dipped a little bit but we were a little cautious. In fact, we're launching a sensitive skin version of it. I did mention that today out in 2013. So, we fully support Pod is a fine product; its got a use out there. I think its particularly attractive to households; we have to go to (inaudible) or difficulty is easy to carry. I told you and I scream again from the pulpit, it is not helping to grow the (laundry) category in fact its hurting the laundry. People use less laundry detergent when they use a Pod they're going to have liquid or powder, but we fully supply the category. We're launching new products to support the category. We'll get our fair share of the category though we believe the answer going forward that's the best in this category, its doing another round of liquid compaction in this category. And we're going to wait for any retailers to tell us to do it, we're not going to wait so the manufacturers do it, we're going to take the lead. Matt, the EBITDA margin is?

[Matthew Farrell:]

Yeah, can you restate the question on EBITDA?

[Unidentified Analyst:]

No, you just said the operating margin for the domestic business over the last two years I mean, there has been an expansion but not as much expansion as you have seen in the international business so the gap between the domestic margins and the international margins have narrowed and I'm wondering if that is going to continue?

[Matthew Farrell:]

The international business because it's fragmented and it's in many different countries its SG&A is typically higher percentage of sales than it is for the domestic business. It's also true for marketing because they are smaller brands they still have to spend more money proportionately. So, marketing as a percentage of sales as well as SG&A has been higher historically for the international business. As far as the (other thing) that's been happening internationally is that we have been selling more household product into Canada and Mexico as a much lower margin so that's been putting pressure on their gross margins that's then brings them down closely to the domestic business and that will continue actually to the extent we continue to drive household in Canada and Mexico so it’s really a mixed effect is what you are seeing. If I could drill a bit too, we thought about distribution gains, that wasn't jus the U.S. we have some major distribution gains on our products going on and our current countries do so it's across the board. Again not because we actually didn't deserve it because our business has been growing so fast the distribution is always trying to catch up to it and our sales and marketing folks done of good job of convincing the retailers say, we need do more shelf space because you are getting out of stocks in our brand because it keep selling more and more.

[James Craigie:]

Yes, sir.

[Unidentified Analyst:]

Just two quick questions here. First on your 2013 EPS outlook was there anything in particular that convinced you to go to the higher end of your range maybe the strong January you had? And then the second question on EPS, your longer-term I guess algorithm consistently you have proven on your base business that you can grow EPS 10% to 12% and your adding Avid, which obviously a top-line growth faster than the overall business and you are getting some cost synergies, which should benefit going forward for many years I would imagine. Why can't this business grow mid -teens instead of maybe the 10% to 12% EPS over the long-term?

[Matthew Farrell:]

Good question. The answer to your first part is, when we first made that call on 2013, we are only I think partway through Q4. Q4 finished stronger and this year started out (business) strong so that's why we raised our target up to we raised the bottom end of the target. Second thing is, I hope you right but we kind of feel at this point and time 14% is a very aggressive call versus the industry. We have to compete with people out there and (inaudible) we want to keep investing in the marketing side as best we can. So, if there is an opportunity to beat that we'll probably redeploy that money back into marketing our businesses and driving their shares for long-term success. So, we love to having a model where we have the ability to invest and still deliver the best EPS results in the industry but we don't today if I could easily beat that non-performance strip up marketing or pull back in initiatives now they’re going to go to the future. But I want to come here every year and tell you at least on a 12% which is nobody else has done the record and we have and I don’t want to have a 20% a year I didn’t get a 5% a year following it I think that good steady double digit growth has been a key of Church & Dwight. Our investors can account on it. It drives our stock price and the consistency of the whole market and the company if you hedge fund and your looking for short term gains go by somebody else. If you are somebody want to buy a stock and go to bed at night and get that 19% CAGR unit TSR by Church & Dwight. Thank you for that 30 second public announcement. Way in the back, back from (inaudible) of producing a beautiful a baby.

[Unidentified Analyst:]

Thank you. Double thank you.

[Matthew Farrell:]

I am not going into diaper business by the way so.

[Unidentified Analyst:]

So and by she loves Church & Dwight rattle.

[Matthew Farrell:]

Thank you.

[Unidentified Analyst:]

Yeah, it’s good.

[Matthew Farrell:]

Few money when you rattle with, got a dollar sign, I told you that.

[Unidentified Analyst:]

So first in just in terms of the distribution gain so if the laundry compaction is incremental product how much of the distribution or is a lot of that incremental distribution in laundry business because of that product…

[Matthew Farrell:]

No I would say its about 50-50 on our base products we have just around distribution gains too on our base products so its going to be a fantastic year for the laundry category distribution gains because we need the more distribution our core products which have been growing steadily and had another record year and now we’re launching this incrementally. So both sides of the business are doing very strong.

[Unidentified Analyst:]

And any sense of where the incremental self space is coming from?

[Matthew Farrell:]

Somebody else.

[Unidentified Analyst:]

Okay.

[Matthew Farrell:]

Somebody who is not growing their shares.

[Unidentified Analyst:]

Got it. And then in terms of wide space entries. I mean last year you talked about wide space entries and some of them kind of were later in the year but how much did you say those ended up adding to your sales growth this year?

[Matthew Farrell:]

It’s a good question. But I honestly I don’t know the quantitative answer to that is certainly is going to help us we had good results last year. I mean sometimes you have a wide space is tough and there is incumbents there they don’t want to see you there. Everything we did last year got off to a great start we’re barely upon it this year. I mean we’re taking on major players like KY like a 60, 70 share lubricants out there. And so there is going to be incumbents who are not going to roll over but we’re being very careful on this we’re not betting the bank of the company on these things we’re launching these categories with products we've been working on for several years with good strong marketing support and we’ll take a one step at a time. And I expect everyone of cases we’re here we’re going to build our share from last year and go forward form there. So we’re not I think, you should comfortable we’re not taking all our marketing money and throwing up behind these initiatives which are riskier because we’re going up against incumbents out there my sales force has got an outstanding job I can tell the lubricant line is getting out there and distribution support out there. I told you I gave the team (inaudible) his team here with new products that charge, I want to be X brand on this category bring excitement news and young feeling to all, very aspirational two versus the big guy out there who we kind of feel is out and dated and not really aggressively pushing the categories, so we are trying to bring that x type feel which is the massive success in the deodorant side of the world. So, I want to think its just – it will be meaningful, it will be meaningful and these products all carry very good gross margin to them. But we are not going to -- trust me – some of them don’t do as well which I don’t expect but we still make our numbers. We still feel confident when we make our numbers on these, we will start to build a very strong presence here. And like I said our goals to be the leading premium lubricant, I should tell you that too, the lubricant category there is a lot of lower priced products. These products are selling for obviously about $14, $15 a box. Yeah, this is the upper end of the premium market. We are not coming into low price entry, which are good chunk of the market. We don’t want to get down the low price, we are going into the upper end of the market. So like x in the category, in the upper price range of the category and that we believe the TROJAN name of the products deserve. So its very good gross margin which enables to have the marketing spending to support these products. And the winner to is, in fact, we are using existing trademark name. So I think, I told you the story earlier, we want launched Alexa– I don’t know 6, 7 years ago was my brainstorm, we lost a whole new condom line TROJAN Alexa, that was mostly Alexa side but TROJAN was there. We spend a fair amount of money on it. The line itself did not do well. We actually have to pull it out of the market but because we have spent money at TROJAN Alexa, it help to build only the best tier ever on the base condom business. So that’s how smart, we didn’t come in within brand x name on lubricants TROJANs. So all that money, we are increasing pretty significantly amount of money we are spending on TROJAN this year and that will help the entire franchise, TROJAN Vibrators, TROJAN Condoms and TROJAN Lubricants. If I have to build a mega brand and Bruce Fleming my head of marketing gang are outstanding out into the advertising, so you do get a sense of the TROJAN brand as you go out there and so everyday we spend will help you entire the line not just the new form in there, both in HAMMER, HAMMER success story I used to tell you all the details here but. ARM & HAMMER when I came here, this was on 2004 was totally what you call desperate brand, the packaging was different, the advertising was different, we spend a dollar of detergent, the new health toothpaste, and Bruce is doing brilliant job, pulled together the advertising, the packaging and everything and that’s why ARM & HAMMER which is a 160 years old, double digit in pretty tough category. We are planning that same thinking I would tell you we are the masters of mega branding. I truly feel that I will tell Coca-Cola, great master two, we are terrific ahead of mega brand, a brand. And that enables you to smartly spend the money and not to just blow money up on a new brand and new category which – if it doesn’t work, you doesn’t wait for the money 100%. This money will not be waste, it will help grow the mega brand. But its like this is the next new thing, we do ARM & HAMMER, we continue to grow that and we are expanding that to new categories, we are taking ARM & HAMMER to Spinbrush now, we took the ARM & HAMMER in an aim to simply failing now, so we will continue to grow that business. We’ve got lot of licensing on that business. I told you before ARM & HAMMER is in more aisles of the grocery store in your brand in America more categories in your brand in America added feel to the growth of a brand, which was going 1% when I and my team walked into the door, now its growing over 10% of the total brand. Now apply that same thinking that TROJAN when I look forward in the future I think some of their brands on our portfolio have mega branding status, which we're beginning to see with OxiClean, now into dishwashing out the soap. A very successful thing we do very well and I think is a way to good results as we go into these white space categories, I hate that term, but its like five categories should make sense. So…

[Unidentified Analyst:]

Thanks. The 20% free loads that you have on the compacted detergent, is that meant to be introductory promo spending or is that kind of a baseline price point where you think the compacted detergent will be?

[James Craigie:]

That’s baseline. And it's not a bonus pack. It will be ongoing, correct? Correct. Yes they are nodding their heads.

[Unidentified Analyst:]

Right and is it – I guess compared to the last time compaction went through where I guess the effort was to maintain price points where you are letting it slip because you guys are going so well and leading it, is that kind of a rationale?

[James Craigie:]

We are maintaining price points. This is from the line price with they call the 2X product. So it would be line price that’s compacted, in this case kind of an encroachment for people to go over to a slightly small package we are offering 20% more loads in it. So I think it was very brilliant move on our part to give people the incentive to- well, it's a little smaller, same price, oh, it offers more Washloads. Great, let’s try. Yes sir.

[Unidentified Analyst:]

I just wanted to get your updated thoughts on share repurchases, you showed the dry powder slide and your leverage is still if you know well I think under where your longer-term targets are, so anything here for 2013 and then may beyond?

[Unverified Speaker:]

Yeah we just to remind everybody, our most recent authorization was $300 million. We had $20 million left on the old authorization. So we had $320 going into the fourth quarter. In the fourth quarter we spend $50 million and in January spend another $50 million. So we spend $100 million of the $320 that we had going into the fourth quarter. Our expectation is that we are done for the year, so that remaining amount of shares are dry powder for share repurchase will be used in 2014 and 2015. And it’s largely the cover share creep.

[James Craigie:]

Yes sir.

[Unidentified Analyst:]

I think when we got together last year you had mentioned that you had spent probably more time looking at acquisitions, than you had in – before - and I was just wondering if you could sort of give us an update on your thoughts of sort of what's out there now, and maybe what your views on bid-ask spread of buyers and sellers at this point?

[James Craigie:]

Yeah so we are still aggressively on the trail. I’m walking out of this meeting right now and half and hour to a meeting in a side room here to look at an acquisition. We've made business, we bought Vitafusion and other acquisitions we’re very selective. I think its an interesting time out there about that I told you I’ve been very surprisingly down sided that they’re have been more acquisitions out there in the marketplace because cash is dirt cheap. Businesses are struggling organically out there. I am surprised that there wasn’t more spin off and divisions or mergers of companies but I think I told you, I think that this would happened is stock market treated everybody pretty well despite lower forecast of organic growth in earnings so companies didn’t feel the pressure, so we have to acquire something and bring a company in, driving synergies driving EPS back up. But I think with cash flow relatively cheap above debt I think you might see some more I don’t know there is a lot of actually out there honestly the sellers still have pretty lofty multiples in their heads for their businesses which is leading to a lot of sales don’t happen because they want a lot more than anybody who is willing to buy. I think that’s pretty smart on the buyers, buyers are staying pretty smart is not overpaying there have been some deals we've seen which we shook our heads at we stopped and we brought the (budgeting) business the competitor of ours bought another business in that space that twice in multiple we bought the business that we would thank them very much because we compete with them. So I hope they’re totally overwhelmed by what the price they bought but I don’t know they’ve been a great company over time we’ll see, we’ll see. There is a lot of activity there is a lot of activity people offering (inaudible) still the road block to more activities the sellers really want too much money for their businesses than that so but we’re very active because we got math so we got a ton of dry powder but we’re very selective and we love this last acquisition there is tremendous potential for us going forward in a tremendous category and we’re looking for businesses like that as we go forward. And we’ll just keep looking So then we’ll go running to one of the side rooms here to see who is there but we’re looking we constantly look and a lot of time in the road looking at stuff because it is a part of that we’re great at it and my team I can’t complement enough -- I sometimes tell people they have to work for greatest strength at Church & Dwight I think there is a lot but at sometimes seems our ability integrated business is one of our greatest strength and all my functions do a brilliant job of bringing those businesses in fast creating accretion. I mean you know a lot of acquisitions on accretive year one, Avid is going to be we told you going to add 5% to our earnings I don’t think the company is going to do that on a scale like that and we do it and seriously absorb that we are looking right now more acquisition is coming on stream and (they haven’t) we’ll take them you might, we’ll say I cant put our trajectory you never know until they happen I know exactly what I’d like to buy right now I can guarantee we’ll get to our satisfactory price with the people trying to sell those business and if we cant no deal and if we can great. Are there question from wonderful crowd here? Well, anyways I want to thank you very much for…

[Unidentified Company Speaker:]

Hey, we have – I’m sorry confused. I’m sorry.

[Unidentified Analyst:]

On the latest round of compaction, how much water is coming out of the bottle and what’s the change in the size of the bottle?

[James Craigie:]

I need my technical genius back in the corner there. This is (inaudible) can you give that in a round number so that I will…

[Unidentified Company Speaker:]

(Inaudible)

[James Craigie:]

All of you, I want to thank you for all coming today for the New York Exchange, two things, we had the most fantastic goody bag you have ever seen in the back of the room, with a lot of new product we talked about today. Please don’t wait to see what’s in it, until you get home in your kitchen with your children around you may want to check that do that before you do that. But with all that exciting products we have the wonder action tooth brush in there, we have the new lubricant line in there, you may want to take that out. We have new gummies in there for adults, please try out, if you haven’t tried adult gummies. I think we have two in there. All the cool store product is in there. So all of our hot, hot new items in that goody bag. And if you really boarded at 3