切遲杜威 (CHD) 2012 Q4 法說會逐字稿

(Event begins in progress)

This is what this was made for. In a recessionary economy, which we've been in since about 2008 this is the case of a laundry category, more and more users are shifting from the premium mid-tier price points to value and extreme value price points. In fact, as of the past year or so, the value category has now grown bigger than the mid-price category, as you can see on this chart. And encroaching up on the premium category soon. In fact, more households, if you look at actual households, more households use a value detergent then, a mid- or premium-priced detergent, and it's growing.

As here's our share results. As you can see, we have just steadily every year gained 1 or 2 points of the total share of the total laundry category. We're now almost 15%. As you can see, Church & Dwight has grown over the last three years. We've gained 3.5% share points. Everybody else has lost. And now we've passed Sun as the number two company in America on a pure dollar share basis.

If you look at the value segments, we're by far the biggest player in the value segment, with over 50% of the segment. We've gained 8% share points within the value players. We're now bigger than the number two, three and four players combined. You can see that in total wash loads -- this is what people actually use in their households -- how many wash loads are our products versus other products. A big difference when you look at dollars. This is just purely what they use in the wash load. You can see we have increased our number of wash loads in the American household between 2009 and 2012. And we are far closer to Proctor on total wash loads than we are on a total dollar basis, and growing.

Now let me tell you why in 2013 I expect continued strong growth of our laundry business plans in 2013. First of all, we have achieved some major distribution gains on our two products across major North American accounts. So we're going to be growing the shelf across all these accounts. I know some of you very sharp analysts will ask me questions as to which accounts. And the answer is, we're not going to tell you. For competitive reasons, we're not going to name those things. These things are happening as we speak. By the way, this a picture of the three analysts who have a hold on our stock. Anyway, so no details. You can ask me 100 times. I'm not going to tell you which accounts, what timing, whatever. I will simply tell you, I'll show a chart later on in distribution across all of our products between 2009 and 2012. I will simply tell you, in 2013 in our laundry business, we probably have the biggest amount of distribution gains than we've ever had in our business.

And, by the way, we deserve this. Because of our share growth, the distribution has to keep catching up with our share gains. This is not like we got something we didn't deserve. We totally deserve this because we grew our share from that prior chart I showed you so much. And we have some great new products coming out next year for both ARM & HAMMER and XTRA that will help drive increased sales, along with that increased distribution. On XTRA, this is a brand that provides great value to consumers. This brand is about one-third the price of the premium brands. Let me put a dimension on how big XTRA is. XTRA's share had it's highest Q share ever in the fourth quarter at 6.4. How big is that? Some of you may not know this. That is bigger than P&G's Era and Cheer combined. That's bigger than [Destar], Sun and Wisk combined. So XTRA is a big brand. And we're launching two great new fragrances on this in 2013. This brand is very much driven by its fragrance appeal. And so we're launching two great new fragrances to help drive this brand.

Big news today, folks. This is ARM & HAMMER Ultra Power. We're leading the way in the [litholony] category on concentration. This is a win for everybody out there. The consumer wins in this case, because we're improving value. We're offering 20% more loads, along with the downsized version here, with a little less water. We're improving performance. This product is 50% whiter and 50% fresher as a product. The smaller bottle, which you get with compaction, is easier handling and storage. It's environmentally friendly because there's less waste. And the consumer can control the dosage. And I'll talk about that in a second. The retailer wins on this one The bottles are smaller. They can ship more per truck so they save lots of money on transportation costs. They can more bottles on the shelf. So (inaudible) stocks, and a higher return on investment, and it drives category growth. We are launching this product incrementally to our base business today. And only will offer it to retailers incrementally. And the results, the sponsor has been extremely positive.

Why are we leading the next round of compaction, some of you would say, because it is a little bit risky, going from bigger bottles to smaller bottles. This is why we're doing it. If you look at the last round of compaction, which happened 2006 to 2007, as it rolled out across the country, and then you look at it in the 12 months after it was fully out there, going into 2008 and '09, compaction drove a 5% gain in the total laundry category. A big improvement. I think total liquid laundry category -- I'm sorry, total laundry category. I got it right in the first place. Read my own slides. That was big. That's big growth. You might say -- Isn't Pods doing that. Or, as some people -- we call it unit dose. The answer is absolutely not. Consumers use less laundry detergent when they switch from liquid or powder to unit dose.

You can see on this chart that as unit dose sales -- this is the total category, this is reported by Nielsen, all channels, which captures 90% of retail consumption out there for all manufacturers involved with it. Unit dose has grown since it started, in the numbers versus year ago. You can see it grew from $22 million over a year ago to $140 million. But you can see what happened to the laundry category, which is liquid, powder and unit dose, all three forms. Incremental in Q1. Within Q2, as the biggest player entered this category and started pushing unit dose, you can see the total detergent category has lost more and more and more sales. Unit dose is hurting the laundry detergent category. Compaction will help the laundry detergent category, as we last said it. And that's why we're leading the effort. And hopefully other manufacturers will get the news and follow us.

I was very pleased to hear yesterday Clorox doing, around a compaction in bleaches. Smart move for all the same reasons we're doing it. So we have a [CD] product portfolio, part premium, part value. Which is really helping to drive great sales, especially in a recessionary time, but also great times, too.

Number two, we know how to build our power brand share. I talked about we have eight power brands, as you can see in these charts. Those eight power brands represent 80% of our sales and profits. Those are the eight powder brands there. They're number one in every category, or a major product in leading households, like ARM & HAMMER, which cuts across many categories. Our formula for growing these things, there's no secret to this. This should be every brand in America. But we have very innovative products. And I would tell you I think our innovation pipeline is as good or better than any other CPG company out there. We've increased our marketing spending, we've increased our distribution. You do those three things and you grow your share and your brands.

Let me talk about new products. We have some major news today coming across. First of all, the major new products on our existing platforms today. And in a second, I'll talk about some white space categories, adjoining categories. First in the lineup of new products, I talked a minute ago about XTRA. Just repeating that slide. I talked a minute ago Ultra Power. big new news, leading the way out there in the next round of compaction.

The next thing is cat litter. Cat litter -- we had a massive new launch last year called Ultra Last. It's the number one new cat litter launched since 2005. And this year, we're going to grow it even further by launching a larger-sized expansion in 2013. Pure Ecstasy on Trojan. This is the next new form of Trojan going out there. We've had a great success line. I'll show you more in a second on that. This is a revolutionary new patent design that makes you feel like nothing's there. And it's an ultra-smooth lubricant going with it.

Nair spa-trade Trio. Last year we launched Nair spa-trade products, the individual products. This year we're combining them into a package called Trio. So you get, in one little package, how to prepare your skin, how to remove the hair, and how to moisturize the skin all at once.

Now, white space. Four big white space categories we're going into, which we think will help drive very significant growth for our Company. These categories are big. Manual tooth brush, an $800 million category. Cold sore, $200 million category. Dishwashing additives, $140 million. Sexual lubricants $250 million category. Last year, we launched, late last year, Tooth Tunes, a proprietary technology we actually acquired from the Hasbro company. This product we launched in the second half of the year. This product is doing awesome. Already achieved a 16% share of kids' battery toothbrushes. This is a case, again, proprietary technology, only we can do. I've always said, jokingly, but true, if you have children you yell at all the time to brush their teeth at night, you have to yell at them to stop brushing their teeth when they play Tooth Tunes and the music is playing in their head.

Big new news here, folks. We have the exclusive license for a musical toothbrush from the One Direction brand. Now, you old-timers in the room are going to say -- who the heck is one Direction? For those of you with young kids, you're going to say -- oh, my God, One Direction, This is the hottest boys band in the world. They sold over 23 million singles, albums and DVDs last year. They were named Billboard and MTV's top artists for 2012. Their world tour for 2013's already been sold out. And they've got a movie coming out in August of this year. This is as hot as it gets. And we're launching two brushes with two of their favorite songs on them. They are in your goodie bag tonight. Those of you going home tonight with, especially young girls in the family, are going to be great heroes when you bring this product home tonight. It's shipping as we speak, and your kids will be the first ones in America to have this product.

Cold sore -- I may have mentioned we've had some issues on the Orajel side of the world from private label. We're dealing with that on a core business. Late last year, we launched a new product, a cold sore treatment, again with some patented technology. This product is incredible. It's always in the top 10 SKUs in the cold sore category. I tell you, if you have a friend who suffers from cold sores, tell them to use this product. The competitive product, the leading brand that's been out there, takes usage over seven straight days, and it only stops healing by about six or seven hours. This product is one application, healing starts immediately, it's incredible. I swear to you, tell your friends who have cold sores, give them this product, they will thank you.

Dishwashing additives -- another thing we started last year, we're going to expand on it this year. Our OxiClean dishwashing booster was the number one new product in the dishwashing additives category. again, we launched it late last year. As I told the story back then, dishwashing products were ordered to get phosphates out of the product last year by the government. Phosphates are great, cheap cleaners that help make your glasses sparkle. They had to take it out. They haven't quite found replacements for that. We've launched this product to help restore the cleaning power of dishwashing products. It has doubled the additives category since we launched. 58% of that growth is due to our product. We've achieved a 10% market share in year one. And we're expanding on that in year two by launching a larger size to provide even greater value to consumers.

Huge news. Our Company, which owns the Trojan brand, the number one sex brand in America, is launching a line of lubricants next year. The lines will be called Trojan Crazy Sexy Feel. We're going to do a [my-my] into this category what the X brand did to the deodorant category. There's going to be great excitement to this category, which it needs. And we have a huge competitive advantage. We're going to be launching samples of this in the millions and millions of boxes of condoms that we sell. We're going to be putting it right into the hands of people out there to enjoy. You can see the lubricant category is very attractive. On a total North American basis, you can see condom's is about a $50 million basis. Lubricants is about half that size. But the category's actually been soft and declining because of the lack of new news. And we're going to fix that. And the margins in this business are very high.

Why do people use lubricants? There's a lot of myths out there which need to be dispelled. A lot of people think lubricants are just used for older women, they're only to fix a problem. That's not true. We've done extensive studies with major universities out there and found lubrication is a critical component to great sex. Lubricants are used mainly for pleasure, fun and comfort. And lubricants use fulfills wants and needs across a wide range of users and situations. You know, folks, sex is gaining mainstream acceptance in this country. The 50 Shades of Gray book was the number one best seller for the past 52 weeks. The movie on that is coming out in 2014.

So we want to take Trojan and make it our next great mega brand in this country, after the ARM & HAMMER mega brand. We want to become the leading brand in three major sexual health segments. We already own a 66% share of the condom business in North America. We want to become the leading premium brand in the vibration market in North America. And we want to become the leading premium brand in the $250 million lubricant market. You can see we've been growing share steadily in condoms, through great innovations that we've launched over the last few years and achieved share growth. Again, this is across the three countries, and doing extremely well.

Lubricants and vibrators, you have to understand, are helping to extend our franchise. As this chart there shows, that's age of consumers along the bottom. And it shows that condoms, the use of condoms declines over age. Lube and vibes don't. They stay very high usage in overall age groups. So this is really going to bring great growth and strength to the Trojan business for us by launching in these businesses.

Let me talk about vies for a second. Interesting facts on vibes. This will make you very popular at your next cocktail party in your neighborhood. Two times more people use vibrators than use condoms. 53% of adult women, 46% of adult men have used a vibrator at some time in their life. 41% of adult women and men have used it with their partner. That would surprise you. And get this one. 56% of women and 69% of men who have never used a vibrator before believe that a vibrator use is a healthy part of a woman's sex life. Whereas people who have used it before believe it's, 95% of them believe that. So this category has a lot of upside opportunity. We now have a full line of vibrators out in the marketplace.

And last year, we did an interesting little test. We decided to give away vibrators in New York City to find out how much people appealed to it, and prove to the retailers in America that everybody wants vibrators. On the first day we did on August 9, we launched it in New York City. We had Howard Stern announce it. And we had people lined up over five blocks long, waiting for a free vibrator. To the point where Mayor Bloomberg sent his folks in and shut us down, And the front page of the New York Post the next day, as is you see on the left there, called a buzz kill. The next day we got a license to come back out and do it from the city. We did it down in the meat packing district. We're not stupid. And you can see the lines, again, lining up there for that and the people loving it. We gave away almost 10,000 free vibrators and it was extremely popular.

We've since rolled that out last year to Chicago and Boston. Had equally incredible results. This year, we're going to roll it out to 15 more cities and drive expanded retail distribution. There's the picture down in Washington, in front of the Washington Monument. Again, we're very careful with how we choose our sites, here, with the symbolism behind them. And had great success. If you want to ask us later today, we'll give you the cities and the timeframes so you can make all of your friends go out and have fun out there.

That's great new products. I think, and again, it's probably the most innovative new pipeline of products that we've ever had in our history, entering some major new categories with exciting news. We support those with increased marketing spending. Interesting chart. We've never quite shown this kind of detail before. This is a chart of our total marketing spending. Very carefully here, this is advertising, consumer and trade dollars. We're not going to give you the details. But I'm just going to show you, if you added those up across the years, you can see that our spending across, in those total three elements of what we call marketing, has grown to 9% CAGR across the year, So we have been increasing our support behind great innovations.

You take those two, you go out to the sales, talk to the retail world and you tell them -- hey, we need more distribution -- and we get it. This is a fascinating chart to compare. In 2009, whatever we had in these brands, how does it compare? If that's 100, how does it compare several years later in 2012? And you can see just in that timeframe, which goes through the end of last year, we've had major gains across our brands. And I would tell you in 2013 will probably be the biggest year of distribution gains across our entire franchise out there. So when I come back here next year, I'll show you the 2013 results. But I can tell you right now, based on what we know from what accounts have said to us, and have guarantied us to do, it's going to be a terrific year in 2013.

You add that all together, and it adds up to great growth in our power brands. This is for the last five years. Our eight power brands have grown share over 75% of the time. Heck of a lot more than some other companies out there who are trying to get to 50%. We've done it 75% of the time. Again, had a great year in 2012, with six of the eight growing. And actually, as I explained to you, Nair had a great year, but there was a new entry that grew the category even more than we grew. So technically our share went down, but our sales were a great year.

These are the charts I love. This just shows you how we're just not one-year wonders. We do it consistently. Here's share in ARM & HAMMER detergent. That's 16% CAGR between 2003 and 2012. Here's ARM & HAMMER Litter, a category we entered in 1998, and had a 14% CAGR in sales growth, driven by tremendous innovations over that time period. OxiClean, a great brand. I'll talk a little bit more in a second. If you look at this brand when we bought it in 2006 to where it is today, and you take this combined sales of the OxiClean product itself and what we've co-branded it with, this product has gone up in a 22% CAGR. And we've tripled the total sales of this business since we bought it in 2006. First Response -- I love this brand. When we acquired this brand in 2001, it was a measly number three brand with a 12% share. Now about 11 years later, we are the number one player in the marketplace, with over a 30 share, and still growing.

The bottom line, we had a great year in 2012 and we exited with great momentum. On the year, six of eight power brands grew to record levels. Didn't just grow. Record all-time levels on an annual basis. And in the core quarter of 2012, seven of the eight grew share in the fourth quarter. And those quarterly shares on 50% of them were record quarterly shares. So very important to us we exit the year with very strong momentum.

Now, look, great portfolio, great power brands driven by innovation, marketing, distribution. But sometimes people say, you're little Church & Dwight. You're only $3 billion in sales, up against guys as big as $80 billion in sales. How do you defend yourself if you get attacked? Let me show you. I've told you this story before. The ending is even better than I told you before. This is the story of OxiClean. We bought this business in 2006. It was a 27% share, which was the number one brand at the time. In the next three years, through 2009, we grew it to a 40.7% share. How did we do that? Like I just told you -- great new products, increased the advertising significantly. But then in 2009, the key player in the marketplace decided they wanted a bigger share of this business. They already had a little stain pen out there, that was a sub 10% share of the category. But they decided to come onboard with all forms and come at us hard. We didn't sit there. We ferociously defended the business. We launched a whole line of new products We also co-branded the product with other products, bringing more awareness to the OxiClean name. We increased advertising spending to make it the number two most advertised product in the entire fabric care category. And the end result was that now today, our share in 2012 is actually higher than it was in 2009 when the other guy entered the category. And you can see on their line, the second line down there, that their share at one point reached as high as 17% to 18% of the category. They are back down to 13% of the category, and area barely above where they started in the business in 2009. And you can see we totally deflected all the share gains to other players in the category. So, not only are we still number one, but we're growing.

International -- international is about 18% of our portfolio. Not as much as other players but a very good piece of our portfolio. Our business is concentrated in six countries, with over $500 million in sales. Five of the six countries are doing very well. Over the five-year time period through 2012, we've had good strong sales growth across those countries. And even the one we're off, we're only down about 1%. Drivers of that is not only do we have our power brands corporately in some of those countries, but we also have some very strong international power brands. Between Rub A35, which is the Icy Hot brand of Canada. We have Gravol, the number one upset stomach brand up there. Sterimar, which is big, which is the international version of Simply Saline we have here. So w have some very strong power brands, the number one or two in their categories out there. Mostly personal care, mostly high margin.

And we have our corporate (inaudible). We've been expanding ARM & HAMMER laundry into Canada and Mexico. Cat litter, the same. We (inaudible) toothpaste around the world, and doing very well in Spinbrush around different countries. We're also acquiring some brands. We acquired the Batiste business last year in the UK. It's a dry shampoo, doing exceptionally well. It's a 6% share in the UK. And you say -- that doesn't sound much. Well, the leading wet shampoo business -- this is a dry shampoo -- the leading wet shampoo business is only a 12. So this business has grown from a 4 to 6% share in the last 12 months. Really a hot product. And we're in the process of expanding this around the world.

And, last, but not least, we're leveraging our one-company strengths and across all functions around the world, both to drive innovation, drive our marketing better, and to drive all of our cost savings.

Number five, expanding gross margin. As we've told you many times in the past, gross margin is the gas to our gas tank. We've had a fantastic record here. Between 2001 and 2012, we've increased our gross margins from 29% roughly to over 44%, a 1,510 basis point increase. You say -- well, talk about competition. The last five years, Church & Dwight has by far exceeded anybody's growth in gross margin in that timeframe. We're over 500 basis points over the last five years. The next closest guy is just about 200 basis points.

The key drivers for that -- things we've talked to you about before, but we keep doing them. The good to great cost optimization program. Good to great is our use of that famous book by Jim Collins. It's just our name but applies to what we call reformulation of products -- reducing packaging, reduce the number of SKUs, make our plants run more efficiently. Laundry compaction was a big contributor back about 2007, 2008. And hedging commodity, we do an excellent job of doing that, to make sure we have consistent and the lowest possible cost for commodities. Supply chain restructuring -- we invest a lot of capital in building some new plants out there to help our laundry and cat litter businesses, which are very heavy businesses. So it makes a great difference to have plants across the country. We now have plants on the East Coast, Midwest and the West Coast. The best distribution chain of any laundry product out in America. And with diesel being as high as it is, it saves us a lot of money on transportation costs to have three plants out there.

Acquisition synergies, I'll talk to you more in a second. We love to acquire higher-margin brands, and then drive a lot of costs out of them to make them even more accretive to our business. And price mix, we have a principle in-house that everything we launch with new products, we want the gross margin to be equal to or higher than the other products in the line that are launched. I mentioned acquisition. We have a great track record on acquisitions. Very clear guidelines. We try to follow in every case. We primarily want number one or two share brands. I'm a firm believer that anything below that is a brand that's in trouble and almost impossible to turn around. So we want leading brands. We want higher-growth brands, higher-margin brands. We want it asset light. That means we don't love to pick up headquarters and plants and things like that. We will if it's a competitive advantage, but we don't like to otherwise. We want to leverage our capital base in manufacturing, logistics and purchasing. And we want businesses we believe over the long-term have a sustainable, competitive advantages, so we can grow their share and sales.

Here's our track record. As you can see, over the past 12 years, our business. And I mentioned earlier -- Matt said it, too -- we have eight power brands. Seven of those eight brands we acquired. I was questioned earlier as to whether the new added acquisition will be our ninth power brand, and it is. So I'll add that soon to presentations going forward. That's going to become our next power brand. We quickly integrate these acquisitions and quickly grow their shares. You can see in all of these acquisitions, how much we have grown share over time. Very solid, consistent record.

Let me talk about Avid for one second. For those of you who haven't heard it before, this is a fantastic acquisition. This is an acquisition in a very fast-growing category called vitamins, minerals and supplements. We had the most unique and hottest product in that category by acquiring this company. Here's a business. Vitamin mill supplements, what a category. You know in our world today, historically, a 3% to 4% growing category was good. Now most categories are growing 0 to 2%. Here's a business that's grown steadily mid high single-digit growth rates. And those growth rates are going to continue, as there's increased focus on health and fitness in this country. As the population ages, the vitamin, mineral and supplement category is going to continue at very strong growth rates.

Interesting split here. Very big difference between the kids category and the adult category. The kids' vitamin business is only about a $200 million category. Adults are at least a $3.3 billion category. Gummies in total make up over 58% of the kids' business. They only make up 3% of the adult business. So we're looking at adults being 16 times the size of the kids as a category. And yet only 3% penetration of gummies. And we believe there's tremendous upside there. Avid L'il Critter brand is already the number one brand in the kids' vitamin world. The Vitafusion brand, which is the adult version, is the number one brand. But, again, number one within only 3% of the total business.

You can see how fast these are growing. The Vitafusion, the adult version, on the left there, was only launched in 2008, and is already through 2011 -- we haven't issued 2012 numbers -- but through 2011 already close to a $100 million business. The kids' side, again, number one player there is already over $100 million business with tremendous growth rates.

This really plays to our strengths. Think about what we do well and what I've talked to you about already. It's a fragmented category that drives an opening for a very strong, agile competitor like Church & Dwight. We have a great track record, I showed you, of building share. We had the resources this company did not have to take all that great product and that great marketing support and expand distribution. We have great internal know-how that they didn't have on batch systems and packaging lines, that we can apply to their plants and save a lot of money. We have economies of scale they don't have, and purchasing logistics. And it's a business -- somebody would say -- this is a regulated business. Well, heck, we have a bunch of regulated businesses, so we fully understand how to properly deal with the FDA going forward.

This is going to have great impact on our share price going forward. We just acquired this business officially on October 1,. We paid $650 million for it. Over this year, next year, we expect to realize $15 million in cost savings. I would tell you that's right on track. Everything is going very well, due to great effort by my entire team. And you can see down below -- I'll talk about this in a few seconds, minutes -- we're calling 9% EPS growth on the core business in 2009. An additional 5% EPS growth will come from the Avid acquisition.

That's our formula there. Great core business. Great acquisitions. Great continued TSR results. And if you haven't tried it yet, there is a sample in your goodie bags. They're right here, there's some in the room here. Try them. I swear to you, I was like most of you. I had never done anything but hard pills for my vitamins. We bought this, I got into it, I got into gummies. And I look forward every morning to get up in the morning and eating my gummies. It's just the best treat. And we have the very bust gummy in the market. I have tried them all many times. Other guys are not as soft and chewy, not as flavorable. We have the best-tasting gummy vitamin out there. And you're going to be hearing a lot about that as we double the advertising spending on this in 2013.

Getting more into the math territory right now, we best-in-class free cash flow. We talked about this. You saw the tremendous growth in cash flow over the last five years. The blue lines here are through 2011 when we had the latest information on competition. You can see, we are best in class. Nobody has done as well as we did. And we've done it again, the gold line in 2012, 118% free cash flow conversion.

Number eight, something very unique about our Company is superior overhead management control. Interesting chart. Our revenues have increased 93% since 2004. Our head count's increased only 15%. Now, I showed you this chart in the past. Our head count actually had gone down through last year. But in the Avid acquisition we picked up about 750 employees. So actually, prior to pick up Avid our employee line would have gone 3,800 in the past to 3,600. So amazing that. We would have increased sales 93% and actually reduced head count. And at the same time, taken our EPS up 260%. But even with Avid, we're still best in class in the industry. Nobody has the revenue per employee that we do, even picking up 750 employees.

And believe me, folks, we do walk the walk. We don't have a Company car. I wish I did. I don't have a Company plan. I wish I did. I don't have a golf club membership. I wish I did. But I have Church & Dwight stock. I can buy all of those things with my Church & Dwight stock because it's gone up so much. In fact, I can buy a lot of those things with my Church & Dwight stock. And if you owned it, too, you could afford all those things. Then you say -- Okay, Jim, great results. How do you get them? How do you keep doing them? We put a new healthcare plan in effect next year to help us save money. You know we spent a lot of money on a new information system a year ago, an SAP system. All that allowed us to go forward and keep our head count down to continue to grow this business. And it will help us as we keep lowering our percent of net revenue spend on what we call SG&A.

My expert management team in the room here today, all my lovely experts. I told you before, I do not believe in rotating people around. I do not believe that a finance person needs training over in sales or marketing or vice versa, makes them a better person in the future could be Jim's replacement someday. I don't need to train 50 people to be my replacement someday. There's only going to be one of me. In the meantime I want my people to become experts in their functions. And they are. My eight strategic business leaders have been in their current jobs at least five years. They have an average of 23 years experience in the industry. That pays off. Our eight power brands, I showed you, have grown category growth 30 out of the 40 times last five years. We were able to minimize head counts because they don't need extra people to help them. In fact, they can reduce people because they know their business so well.

That leads to outstanding execution. Everybody knows each other, they know what they are doing. They've been dealing with each other for years. It's great, and then execution is one of the great hallmarks of Church & Dwight. And we're able to absorb -- big one -- absorb acquisitions without adding on incremental head count. My people actually beg me, they're somewhat bored running the same business over again. They say -- give me new brands, give me new businesses. And we can bring those businesses on without adding a lot of additional head count.

Put those one through nine, you end up the fact that we are total shareholder return junkies. We've had an incredible decade of growth, tripling sales. Gross margins were up. Marketing spending up. SG&A only up 220 basis points. Leads to great results, you can read them, on operating income, EPS, adjusted free cash flow. And our market cap in my tenure has grown from $2 billion to over $8 billion. Huge increase. And if you owned our stock the last 10 years, you have averaged 19.2% on the total shareholder return, which ought to make a lot of your investors out there and shareholders very happy.

There's my team. That was actually done a year ago, February 7. To my point a second ago, there's my team. Every one of them is here today, who was there last year. I'm even wearing the same stupid tie I wore last year. Last year, I had a Giants had on because the Giants had just won the Super Bowl. I'm not a Ravens fan. They are a good team. But, anyways, we're here back again today, with all my greatTSR junkies throughout this room. Folks, we are 100% in the game. Our bonuses are tied 100% to business results. The business results that mean the most to you and all of your models out there. 25% of my bonus is net revenue. 25% is my bonus is hitting the gross margin, expansion targets. 25% is hitting our adjusted EPS target. And 25% is free cash flow. Our equity compensation is 100% stock options. That's what you should want to hear. We're not here to get rewarded if the stock price doesn't go up. We don't have phantom stock or restrictive stock that grows in value for no improvement in stock price. We are 100% stock options. We're exactly the same mindset you are. Grow that stock price. And we're required to be heavily invested. Over 80% of my net worth is in this Company's stock. So, trust me, I watch the results every day. We broke 60 this morning. Thank you.

Anyway, with that, I'll have Matt come back up here and tell you more about the outlook for 2013 and the numbers term.

Okay, I'm going to wrap it up now. Just so you know, our long-term algorithm for organic sales growth is 3% to 4%. We're calling that again in 2013. And as I said before, we have three divisions -- domestic, international, and specialty products. So all three divisions, we expect to be within that range. Gross margin, you should all think of 2013 as a reset year for us. We just acquired a business that has lower than Company average gross margins, so we have four quarters of that baked into our numbers in 2013. But keep in mind, as we said in the release, that we expect our existing business, base business, to expand its gross margin 25 to 50 basis points. One other thing, too, is we have about 60% of our most volatile commodities hedged as of today. So again, it increases our confidence in our ability to hit that number on a full-year basis.

And then marketing, again, it's a reset year for us. 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 were going to take that up, but not as high as necessarily as our other businesses. And the thing we watch most closely is share voice versus share market. So we're always very keen on what is being spent in a particular category, and making sure that we're more than competitive with respect to our investment in our brands.

And then, finally, EPS, you can see we're expecting 14% EPS growth in 2013. And this is a summary page. So 3% to 4%. Gross margin, marketing, flattish. But, remember, as I explained, the acquisition has 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 10% or better. And you see the 10 for 20 club there. The whole idea there is, by 2020, that we will have done it 20 years in a row. So 2013 would be the 13th year that we're shooting for.

Now we're ready for questions.

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

Is there a plan to take the whole laundry portfolio to 4X concentrate at some point? So is this like a test to see how it goes, and then ultimately you might want to convert the whole thing?

No, it's not a test. We're launching this incrementally into the business. If eventually the retailers of the world decide they want everybody to go to 4X, we would be perfectly happy taking our whole line. But right now, this is just being launched as an incremental effort to our current business. We think it will please consumers tremendously, please retailers. And I think as a result, hopefully the retailers will say -- why isn't everything for everybody on a compacted basis?

Got you. And did you say which retailers you were going to expand the distribution in? (laughter) I'm just kidding. On the Avid business, is there a game plan to get the gross margin up above corporate averages? And then could you just tell us what the business grew this year? Because the market share looks pretty great relative to when you bought it.

I'm sorry, what was the second one?

The Avid growth this year. I know it's not organic yet but just that business from that 2011 basis.

Double digits. It was double digits on the growth. That's all I'll tell you. We do have a long-term game plan to get it up over the corporate average.

Great, thanks.

Alice.

I don't think in the press release was a breakout of what I would call non-recurring items in the fourth quarter tied to Avid. Could you tell us what they are in terms of inventory step-up, transition costs and deal costs?

Yes, they are actually no different than we said previously.

$0.06?

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

In the guidance, you said that Avid would add 5% to earnings. But if you adjust that out, it's more like 2%, right?

We don't think of it that way. 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 as the EPS that Avid contributed to the fourth quarter is no different than if we bought it on December 31. So consequently, we want everybody to understand this $0.13 of earnings per share in our numbers in 2013.

And don't forget, we told you, we're going to at least double marketing spending on Avid. We stepped it up a little in Q4, but really that'll take starting this quarter right now. So we're going to be significantly increasing the marketing spending to drive the strong growth here. So you can't use Q4 really as a base of what happened, because the marketing spending hadn't fully been stepped up yet. We had the step-up charges. And we are just getting control of this business as far as distribution and that. But this will be a double-digit grower on revenues for us. Then we're going to spend some of that back on the marketing side to drive this business. Because we just think it's a long-term tiger by the tail we have here. We want that growth to get out there and do very well as quickly as we can.

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

The kids' vitamin part, because we're already -- the kids -- gummies are already over 50% of the total kid category. We're already number one. So the growth there won't be as much as the adults because we're already a big number one player there in a category that's already well developed. It's growing. It will be more, I would say, mid single digits. And then on the adult side, depending on how fast we get the distribution, how fast we drive the growth, we'll 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. It's a big business of samples. Sampling drives this business. When you taste this product, you're converted on the spot. So we have to do a lot of sampling programs. And those take some time. But 2013 will be a great year to drive a lot of incremental distribution, incremental -- our sampling. And then convert all these people to gummy users long-term, especially on the adult side.

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

Yes.

And the last part is, is ARM & HAMMER or XTRA growing faster in 2013, of the two?

Both are going to have a great year. Both are getting significant incremental distribution. Both have great new product launching. We'll be supporting those heavily. And we had a great year in 2012. The fastest grower in the entire laundry category in 2012. Biggest share gainer in 2012. And with what I know right now in 2013, it will be another terrific year. No more. You're done. Next.

Thanks. Can you just talk a little bit about the competitive environment? What are you building in for 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.

Jason, are you talking gummies or everything?

I'm talking everything.

I think it's a pretty stable competitive environment out there. I think the business environment, the economy is just in a lull where it's been. We've seen every category for the past two years, about 50% are up and 50% are flat or down. I see that continuing. I don't see any difference. I'm actually 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.

If you watch what happened, the building industry is having a turnaround. And the building industry usually precedes an economic turnaround, because new homes create needs for products 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 to, hopefully, maybe in 2014 or 2015 -- I don't think it'll happen so much this year, it takes time. But I love the fact I'm seeing confidence in the consumer environment out there starting to build. And I hope it continues. I hope our government quits putting us in a crisis mode with these fiscal cliff issues. It gets everybody all nervous, because when consumers get nervous, they pull back. So let's hope they can solve the budget crisis and move forward. And I hope the building industry out there continues to improve. And maybe in 2014 and '15, we'll see some improvement in the GDP. I think 2013 is just another lull year right now, but I don't see things getting worse. I just don't see them in 2013 getting better. Hopefully I can stand here a year from now, and hopefully the data will support the beginning of a turnaround in this country. We'll see.

Okay. And then just on the 3% to 4% organic, I know you labeled that your assumptions were aggressive, but, I think achievable is your quote. The 3% to 4%, if you think about it, you're going to get Avid into the organic sales composition.

Not in one quarter.

No, let me finish -- by the fourth quarter. You're getting increased distribution. You're already saying laundry is going to grow faster than the total Company. So, again, I understand it's an evergreen target, but when you flush it out a little bit more, what could really stand--?

Jason, when I said aggressive, I'm thinking more of the 14% EPS target. Nobody is up to 14% in our industry. It's a tough, competitive environment. We got a lot of stuff going on out there. We do expect to spend the marketing support to do it. I would be very happy -- my number one thing is the 14% EPS target. We're going to deliver that, come hell or high water. And if there's competitive issues out there, we'll deal with them. But that's an aggressive target. Nobody I know is even in double-digit range. The 10%, we're several hundred basis points above anybody else in this industry as far as EPS growth. And I think that's extremely aggressive, given the world we face out there.

So could we do better than 3% to 4%? Possibly, but if we do, we'll probably reinvest the money in the business with the marketing spending. So I want to exit next year with share growth on at least 75% of our brands, and maybe even stronger in the fourth quarter. That formula's worked for us consistently. I told you, I won't show you the numbers, but I'll just say, in general, our January results were very strong this year, so we're off to a good start. You always worry you have a good year and a good quarter, that it might have been inventory loading or something. That did not happen. And I would gauge that by how well January is. And January's off to a very good start. So I'm very encouraged that we're off to another good year. It's one month, but I'll take it in the bag and we'll see what happens. Got 11 months to go. I feel very positive about 2013 for my Company.

Okay. Joe, Bill?

Thanks. Just two questions on gross margin. Last year, you said you did 30 basis points on the base business. And you're sticking with your long-term 25 to 50 for '13. You will have a full year of compaction, at least partial compaction You've got a full year of the price increases in cat litter. You've 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've obviously got some shifting comparisons in the base period into '12, plus you've got Avid.

As far as the comparisons go, the more favorable comparison is in the second half. So when you think about flattish on the full year, you expect to be down in the first half and up in the second half. Avid, obviously we're going to get some of those synergies. So just remember, we have $15 million of synergies. Most of those come post 2013, but we have some coming in the second half of this year. And as far as can we beat the 25 to 50 basis points? Maybe. As Jim said, it's just like the 3% to 4%. So there's lots of things that could happen during the year. And we do have lots of pluses, as well. Also, we have a lot of dry powder with which to deal with competitors.

You're right, everything you said. 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's still, I think, a good target, but aggressive target on the core business, and the mix drawdown from the Avid business. But we do. We do have a lot of good initiatives. We put a lot of time on last year with the new plants and everything else coming onstream. And hopefully it will pay off and deliver at least that in 2013. Bill?

Yes, just following up on the gross margin. Looking back to the last round of compaction, did you ever quantify, or could you quantify, what it did to gross margin? Was it 200 basis points? 300 basis points? And then as we look at this, is it that type of -- if it was all implemented again, can you have that type of benefit? Or is there something where structurally a lot of the low-hanging fruit's already been grabbed?

That's about the 472nd time people have asked us what our historical game is on compaction.

I can try.

It was meaningful. It was the single largest product impact on gross margin in my tenure in this Company. I will not tell you what it's worth. This time -- last time we did it on the entire line -- this time it's just on the incremental piece. So it certainly won't be as big 2013. If not, it would be big if the whole business was converted. And we hope the retailers of this country will see that. The consumers will vote thumbs-up and the retailers will then, especially the big one out there, will give the thumbs up for the entire industry -- to Bill's point -- to let's take this to it. I'm encouraged by Clorox's action on bleach. I hope that shows the way. Because the effort, if anything, we as a manufacturer do, should be to grow a category and at the same time bring benefits to consumers that they will appreciate. And this effort does.

And I hope what we're doing is kind of risky on our part to take the lead. But, again, we did it only by the retailers and bringing it on incremental. Everybody we've talked to is willing to do that and add it on incremental to our business. And hopefully consumers will react very strongly. We're going to put some good strong marketing support behind this. And I think our guys have done an outstanding way of putting the product out there, with a great package, and offering 20% more loads to encourage people to bring the product on and try it. We got great distribution, great displays that are coming, launching this quarter, as we speak. You'll see it popping up. You'll see the commercials start mid to late this quarter. And, hopefully, the results will be great. And hopefully it will encourage the entire industry to move to this effort on a complete basis of the line.

Great. And on the distribution gains, I think one of the goals, or a possibility out of Victorville was to maybe expand distribution on the West Coast and West Coast retailers. Is that part of what you're talking about in some of the distribution gains? Or is it still to early?

The truth was, we had already been expanding a lot on the West Coast, and it was costing us a lot of money to ship out to some major accounts out there. There's nothing significantly different than gains on the West Coast and elsewhere. It's just now we can ship it out there a lot less. So, yes, we've had major gains on the West Coast accounts, and doing very well out there. In fact, I'll have to check with Mr Tursi, but I believe we're the number one laundry brand in one of the major accounts on the West Coast right now. Certainly by far the number one value brand out there. So being able to ship a lot less distance to these accounts is the reason we built the Victorville plant. It wasn't so much the -- the plant in Pennsylvania, York, Pennsylvania, was more from a processing basis because our previous plant was all discombobulated. And we made a very streamlined plant. That was all about savings about processing and making the product. The Victorville plant was more of a case of saving on logistics and that. It will benefit us from having much savings on the two heaviest products we make -- laundry detergent and cat litter. Next? You've always got to be careful with a lady in red.

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

We actually do break out interest expense. When we file the 10-K, you'll see it. We typically do not do that in the Qs. The full-year interest expense for the Company was $14 million. You probably wouldn't figure this out on your own, but next year it's going to be around $26 million. So it'll be $12 million incrementally, year-over-year. The other thing that's worth knowing with respect to other income is also our JV income. So in 2012, you'll see it was $9 million. The expectation for next year is $7 million. That's also a hurt, as well. So those together, about $14 million drag year-over-year.

I would like to brag, too. The money we had to borrow to buy the Avid acquisition, my finance team set a record on Wall Street for the lowest interest rate ever for a company at our rating level. Correct?

Yes, for 10-year money, BBB rated.

Just goes to show the confidence that Wall Street has and investors have in us being able to pay off our debt.

(inaudible).

I'm sorry, I can't hear you.

Do you plan to pay off any of it in '13? What's the schedule?

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

First question on the international margins. I think you've seen 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 specifically your strategy with respect to pods? God forbid, you're wrong and Pods continued to do well for Tide, is that a segment of the category you just don't want to play in, or you're going to continue to invest behind it?

Thank you for asking. I'm very -- I'll take the second part and Matt will talk about the margin. No, pods is a very great product out there. We support it. We launched ours. In fact, we were first in the marketplace with our product. Over the course of the whole year, we've got our fair share of the product out there. We're very happy with it. We got a little cautionary in Q4 when there were consumer issues with the pods out there. And we pulled back some marketing support as it sorted out as to whether or not this product was going to face any potential recalls or anything because of the consumer news. So our share in the market in the fourth quarter dipped a little bit because we were a little cautious. But, no. In fact, we're launching a sensitive skin version of it -- I didn't mention that today -- out in 2013. So we fully support pods.

Pods is good. Pods is a fine product. It's got a use out there. I think it's particularly attractive to households who have to go to laundromats, or difficulty -- it's easier to carry. But I told you, and I'll scream again from the pulpit, it is not helping to grow the laundry category. In fact, it's hurting the laundry category. People use less laundry detergent when they use a pod than when they have liquid or powder. But we fully support the category. We're launching a new product to support the category. We'll get our fair share of the category. But we believe the answer going forward, that the best in this category is to do another round of liquid compaction in this category. And we're not going to wait for any retailers to tell us to do it. We're going to wait for other manufacturers to do it. We're going to take the lead. And the EBITDA margin issue?

Can you restate your question on EBITDA?

Just the operating margin for the domestic business over the last two years. There's been expansion, but not as much expansion as you've 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.

The international business, because it's fragmented and it's in many different countries, its SG&A is typically a higher percentage of sales than it is for the domestic business. It's also true for marketing, because they're smaller brands, you 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. The other thing that's been happening internationally is that we've 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 then brings them down closer to the domestic business. And that will continue, actually, to the extent that we continue to drive household in Canada and Mexico. So it's really a mix effect, is what you're seeing.

Okay. Thanks.

And if I could build on that, too, we talked about distribution gains. That wasn't just US. We have some major distribution gains on our products going on in our foreign countries, too. So it's across the board. Again, not because we asked for it and deserve it, but because our business has been growing so fast. Distribution is always trying to catch up to it. And our sales and marketing force have done a great job of convincing the retailers -- hey, we need more shelf space because you're getting out of stocks on our brand. Because they just keep selling more and more.

Yes, sir?

Hi, thanks. 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 long-term algorithm. Consistently you've proven on your base business that you can grow EPS 10% to 12%. And you're adding Avid, which obviously top line grows faster than the overall business. And you're 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?

Good question. The answer to your first part is when we first made that call on 2013, we were only, I think, part way through Q4. Q4 finished stronger. And this year started out good and strong. So that's why we raised our target up to -- we raised the bottom end up of the target.

Second thing, is I hope you're right, but we feel at this point in time, 14% is a very aggressive call versus the industry. We have to compete with people out there. And to tell you the truth, 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 having a model where we have the ability to invest and still deliver the best EPS results in the industry. But we don't -- I could easily beat that number if I wanted to strip out marketing or pull back on initiatives and that, that are going to grow the future.

But I want to come here every year and tell you at least 10% to 12%, which nobody else has done on the record what we have. And I don't want to have a 20% year and then get a 5% year following it. I think that good, steady double-digit growth has been the key for Church & Dwight. Our investors can count on it. It drives our stock price. And the consistency is a hallmark of the Company. if you're a hedge fund, and you're looking for short-term gains, go buy somebody else. If you're somebody who wants to buy our stock and go to bed at night and get that 19% CAGR and your TSR, buy Church & Dwight.

Thank you for that 30-second public announcement. Way in the back. Back from maternity leave, producing a beautiful baby.

Thank you. Double thank you.

I'm not going in the diaper business, by the way.

And she loves her Church & Dwight rattle.

Thank you. Does it spew money when you rattle it? It's got a dollar sign on it, I told you that.

First, in terms of distribution gains, if the laundry compaction's an incremental product, how much of the distribution -- or is a lot of the incremental distribution of the laundry business because of that product?

No, I would say about 50%/50%. On our base products, we have good strong distribution gains, too, on our base products. So it's a fantastic year for laundry category distribution gains. Because we need the more distribution in 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.

Any sense for where the incremental shelf space is coming from?

Somebody else. Somebody who's not growing their shares.

Got it. And then in terms of white space entries, last year you talked about white space entries, and some of them were later in the year. But how much would you say those ended up adding to your sales growth this year?

That's a good question. Honestly, I don't know the quantitative answer to that. It's certainly going to help us. We had good results last year. Sometimes when you enter white space, it's tough. There's incumbents there. They don't want to see you there. Everything we did last year got off to a great start. We're building upon it this year. We're taking on major players like KY, where it's like a 60%, 70% of lubricants out there. So the incumbents 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 it one step at a time.

I expect every one of the cases we're here, we're going to build our share from last year and go forward from there. I think you should feel comfortable we're not taking all of our marketing money and throwing it behind these initiatives, which are riskier because we're going up against incumbents out there. Our sales force has done an outstanding job. I can tell you the lubricant line is getting outstanding distribution support out there. I told you, I gave the team, Steve Cugine and his team here, who leads new products, the charge -- I want to be the AXE brand of this category. Bring excitement and news and young feeling to it all. Very aspirational to it. Versus the big guy out there who we feel is old and dated and not really aggressively pushing the category. So we're trying to bring that AXE-type feel, which was a massive success in the deodorant side of the world.

It will be meaningful. It will be meaningful. And these products all carry very good gross margin to them. But we're not going to -- trust me, if some of them don't do as well, which I don't expect, we'll still make our numbers. We still feel confident we'll make our numbers on these. But we'll start to build a very strong presence here. Like I say, our goal is to be the leading premium lubricant. I should tell you that, too, in the lubricant category, there's a lot of lower-priced products. These products are selling for -- help me Steve and Louis, about $14, $15 a box. So this is in the upper end of the premium market. We're not coming in with low-price entries, which are a good chunk of the market. We don't want to get down to the low price end. We're going in at the upper end of the market. Like AXE did in their category. AXE went in, in the upper price range of the category. And that's what we believe the Trojan name and these products deserve.

It's very good growth margin on them, which enables us to have the marketing spending to support these products. And the winner, too, is the fact that we're using existing trademark names. So I think I told you the story earlier, we launched Alexa -- I don't know, six, seven years ago, it was my brainstorm. We launched a whole new condom line, Trojan Alexa, but it was mostly on the Alexa's side. But Trojan was there. We spent a fair amount of money on it. The line itself did not do well. We eventually pulled it out of the market. But because we had spent money as Trojan Alexa, it helped build -- we had the best year ever on the base condom business. So that why smartly here, we didn't come in with brand X name on a lubricant. It's Trojan. So all that money, we're increasing pretty significantly the amount of money we're spending on Trojan this year and that will help the entire franchise.

It's Trojan vibrators, Trojan condoms, and Trojan lubricants. That's how you build a mega brand. And Bruce Fleming, my head of marketing gang, are outstanding on how to do the advertising. So you do get a sense of the Trojan brand as you go out there. So every $1 we spend will help the entire line, not just the new form in that. That's how we built ARM & HAMMER.

ARM & HAMMER is a success story I use to tell you all the details here. ARM & HAMMER, when I came -- this was in 2004 -- was totally, what do you call it, disparate brand. The packaging was different, the advertising was different. And when we spent $1 on detergent it didn't help toothpaste at all,. And Bruce and his gang did a brilliant job of pulling together the advertising and the packaging and everything. That's why ARM & HAMMER, which is over 160 years old, has been growing double digits in pretty tough categories. We're applying that same thinking. I would tell you, we are the masters of mega branding. I truly feel. I would call Coca-Cola a great master, too. But we are terrific at how to mega brand a brand. And that enables you to smartly spend the money and not just blow money off on a new brand, a new category. Which, if it doesn't work, you just wasted the money 100%. This money will not be wasted. It will help grow the mega brand.

This is the next big one. We did ARM & HAMMER, we continue to grow that. And we're expanding that into new categories. We have taken the ARM & HAMMER name to Spinbrush now. We took the ARM & HAMMER name to Simply Saline now. So we're continuing to grow that business. We do a lot of licensing on that business. I told you before, ARM & HAMMER is in more aisles of the grocery store than any brand in America, more categories than any other brand in America. And it's leading to the growth of a brand which was growing 1% when I and my team walked in the door. Now it's growing over 10% of the total brand. Now we're going to apply that same thinking to Trojan. And I look forward in the future -- I think some of their brands in our portfolio have mega branding status, which we're beginning to throw as with OxiClean, now, into dishwashing additive. So a very successful thing we do very well. And I think it will lead to good results as we go into these white space categories. I hate that term, but it's five categories that make sense.

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

That's baseline. And it's not a bonus pack. It will be ongoing, correct? Correct. They're nodding their heads.

And is it -- compared to the last time compaction went through, where I guess the effort was to maintain price points, where you're letting it slip here, is it just because you guys are going solo in leading it? Is that the rationale?

We're maintaining price points. This is going to be line priced with, they call it the 2X product. So it will be line price, but compacted. In this case, an encouragement for people to go over to a slightly smaller package, where we're offering 20% more loads in it. I think it was a very brilliant move on our part to give people the incentive to -- well, it's a little smaller, same price -- oh, it offers more wash loads. Great, let's try it.

Yes, sir?

I just wanted to get your updated thoughts on share repurchases. You showed the dry powder slide, and your leverage is still well, I think, under where your longer-term targets are. So any thinking for 2013 and then maybe beyond?

Yes, just to remind everybody, our most recent authorization was $300 million. We had $20 million left on our old authorization. So we had $320 million going into the fourth quarter. In the fourth quarter, we spent $50 million. And in January, we spent another $50 million. So we spent $100 million of the $320 million that we had going into the fourth quarter. Our expectation is that we're done for the year. So that remaining amount of shares, or dry powder for share repurchase, will be used in 2014 and '15. And it's largely to cover share creep.

Yes, sir?

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

We are still aggressively on the trail. I'm walking out of this meeting right now, in a half hour, to a meeting in a side room here to look at an acquisition. We've made bids since we bought Vitafusion, other acquisitions. We're very selective. I think it's an interesting time out there. I told you, I've been very surprisingly, on the down side, that there haven't been more acquisitions out there in the marketplace, because cash is dirt cheap. Businesses are struggling organically out there. I'm surprised there wasn't more spinoff of divisions or mergers of companies. But I think, and I told you I think the reason it didn't happen is the stock market treated everybody pretty well, despite lower forecasts of organic growth and earnings. So companies didn't feel the pressure to go out and acquire something and bring a company in, drive synergies, and drive their EPS back up.

But I think with cash still relatively cheap to borrow debt, I think you might see more. There's a lot of activity 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's willing to buy. I think that's pretty smart on the buyers. Buyers are staying pretty smart, not overpaying. There have been some deals we've see which we shook our heads at. Just after we bought the vitamin business, a competitor of ours bought another business in that space at twice the multiple we bought the business at. We were -- thanked them very much because we compete with them. So I hope they are totally overwhelmed with the price they bought. But, I don't know, they have been a great company over time. We'll see.

There's a lot of activity. There's a lot of activity, people offering stuff. Generally, still, the road block to more activity is the sellers really want too much money for their businesses and that. But we're very active. Because we got -- Matt showed you -- we've got a ton of dry powder, but we're very selective. And we love this last acquisition. It has tremendous potential for us going forward, and a tremendous category. And we're looking for businesses like that as we go forward, and we'll just keep looking. So don't all go running to one of the rooms here to see who's there. But we're looking. We constantly look. Spend a lot of time on the road looking at stuff. Because it is a part of our -- we're great at it. My team, I can't compliment enough.

I sometimes tell people, they ask me what's the greatest strength of Church & Dwight, and I think there's a lot. But I sometimes think our ability to integrate a business is one of our greatest strengths. All my functions do a brilliant job of bringing those businesses in fast, creating accretion. A lot of acquisitions aren't accretive year one. Year one, Avid's going to be -- we told, going to add 5% to our earnings. I don't think many companies can do that on a scale like that. And we do it. And as soon as we absorb that, we're out looking right now, but we're looking for more acquisitions coming onstream, and we'll take them. We'll see. I can't ever predict, because you never know until they happen. I know exactly what I would like to buy right now. I can't guarantee you we'll get to a satisfactorily price with the people trying to sell those businesses. And if we can't, no deal. And if we can, great.

Any other questions from this wonderful crowd here? I want to thank you very much. I'm sorry -- I didn't see you, sir. Sorry.

On the latest round of compactions, how much water is coming out of the bottle? And what's the change in the size of the bottle?

I need my technical genius back from the corner there. Mr. Siracusa, can you give that in round numbers without--?

2X. So multiply it by two (inaudible).

All of you, I want to thank you for coming today to the New York Stock Exchange. Two things. We have the most fantastic goodie bag you've ever seen in the back of the room, with a lot of the new products we talked about today. Please don't wait to see what's in there until you get home in your kitchen with your children around. You may want to check that before you do that. But it's all very exciting products. We have the One Direction Tooth Tunes toothbrush is 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 those, if you haven't tried adult gummies. I can't remember -- other Tooth Tunes in there, and all the cold sore product is in there. So all of our hot new items are in that goodie bag. And if you're really board, at 3.59, in 45 seconds, you'll see my ugly face and my team on CNBC today ringing the closing bell. Thank you.