CHURCH DWIGHT CO INC DE
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
CHD$109.33-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000950170-24-051879
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-090144
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 65 previous paragraphs and 69 current paragraphs.
28 unchanged; 30 reworded; 11 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
On June 3, 2024, we acquired substantially all of the issued and outstanding shares of capital stock of Graphico, Inc. ("Graphico"), a Japan-based distributor focused on consumer goods primarily in the Japanese market (the “Graphico Acquisition”). We paid $19.9, net of cash acquired, at closing. We acquired the remaining minority shares for approximately $2.0 in July 2024. Graphico’s annual net sales for the year ended December 31, 2023 were approximately $38.0. The Graphico Acquisition was financed with cash on hand, is expected to contribute to greater expansion of our business in the Asia-Pacific (APAC) region, and is managed in the Consumer International segment.
Current report
During the second quarter of 2024, we sold our Passport food safety business, Passport Food Safety Solutions, Inc., with assets of $7.0, inclusive of intangible assets of $2.7 and corresponding goodwill of $1.0, for cash proceeds of $6.6 and $0.5 held in escrow for a gain of $0.1.
Current report
During the second quarter of 2024, we received a favorable tariff ruling from the U.S. government associated with certain products imported from China. This ruling resulted in a $26.1 reduction of Cost of goods sold during the second quarter of 2024.
Current report
In the first quarter of 2024, we exited the MEGALAC supplement portion of the SPD Animal Nutrition business. In the second quarter of 2024 we acquired substantially all of Graphico and sold the Passport food safety business.
Current report
The increase in the tax rate for both periods is primarily from a lower tax benefit on reduced stock option exercises in 2024 compared to 2023.
Current report
The Graphico acquisition is included in our results since June 1, 2024, the date of acquisition.
Current report
Consumer International income before income taxes was $32.9 in the second quarter of 2024, a $5.4 increase as compared to the second quarter of 2023. The increase is due primarily to a favorable price/mix of $11.7, the impact of higher sales volumes of $4.5, and favorable interest and other expenses of $0.6, partially offset by higher marketing expenses of $5.7, higher SG&A expenses of $4.3 (including Graphico), unfavorable foreign exchange rates of $1.5 and higher manufacturing and commodity costs of $0.2. For the first six months of 2024, income before income taxes was $65.9, an $9.5 increase as compared to the same period in 2023. The increase is due primarily to a favorable price/mix of $22.0, the impact of higher sales volumes of $10.9, and favorable interest and other expenses of $0.6, partially offset by higher marketing expenses of $11.8, higher SG&A expenses of $11.2 (including Graphico), unfavorable foreign exchange rates of $0.9 and higher manufacturing and distribution expenses of $0.3.
Current report
We exited the MEGALAC supplement portion of the Animal Nutrition business in the first quarter of 2024 and sold the Passport food safety business in the second quarter of 2024.
Current report
Net sales excluding product line divestitures increased in the three and six months ended June 30, 2024 primarily due to strong growth internationally for our animal nutrition segment and domestically for our specialty chemicals segment.
Current report
SPD income before income taxes was $11.3 in the second quarter of 2024, an increase of $2.1 as compared to the same period in 2023 due to lower SG&A and other costs of $1.3, favorable manufacturing costs of $0.8, and lower marketing costs of $0.4, partially offset by lower volumes of $0.3 (including the exit of MEGALAC) and unfavorable price/mix of $0.2. SPD income before income taxes was $22.1 in the first six months of 2024, an increase of $6.1 as compared to the same period in 2023 due primarily to favorable price/product mix of $3.2, lower marketing expenses of $1.5, lower SG&A and other costs of $1.4 and the impact of higher sales volumes of $0.9 (including the exit of MEGALAC), partially offset by unfavorable manufacturing costs of $0.8.
Current report
As of June 30, 2024, there remains $658.9 of share repurchase availability under the 2021 Share Repurchase Program.
Removed paragraphs (7)
Previous report
In March, we signed a definitive agreement to acquire Graphico, Inc. (“Graphico”) for an estimated $35.0. Graphico is a Japan-based distributor focused on consumer goods, health foods, and cosmetics, primarily in the Japanese market, which we have partnered with since 2008. We expect the acquisition to close later this year, and the acquisition is expected to contribute to greater expansion of our business in the APAC region.
Previous report
(3) In the first quarter of 2024, we exited a product line in the SPD Animal Nutrition business.
Previous report
Consumer International income before income taxes was $33.0 in the first quarter of 2024, an increase of $4.1 as compared to the first quarter of 2023. The increase is due primarily to a favorable price/mix of $10.1, the impact of higher sales volumes of $6.4, favorable foreign exchange rates of $0.6, and lower manufacturing and commodity costs of $0.2, partially offset by higher SG&A expenses of $6.9, higher marketing expenses of $6.0, and unfavorable interest and other expenses of $0.2.
Previous report
In the first quarter of 2024, we exited a product line in the SPD Animal Nutrition business.
Previous report
Net sales increased in the first quarter of 2024 primarily due to strong growth internationally and growth within the domestic non-dairy segment.
Previous report
SPD income before income taxes was $10.8 in the first quarter of 2024, an increase of $4.0 as compared to the same period in 2023, due to favorable price/product mix of $3.4, the impact of higher sales volumes of $1.1, and lower marketing expenses of $1.1, partially offset by unfavorable manufacturing costs of $1.6.
Reworded paragraphs (30)
Previous wording
We sell our consumer products under a variety of brands through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar and other discount stores, pet and other specialty stores and websites and other e-commerce channels, all of which sell our products to consumers. We sell our specialty products to industrial customers, livestock producers and through distributors.
Current wording
We sell our consumer products through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar and other discount stores, pet and other specialty stores and websites and other e-commerce channels, all of which sell our products to consumers. We sell our specialty products to industrial customers, livestock producers and through distributors.
Previous wording
On October 4, 2021, members of the Organisation for Economic Co-operation and Development (“OECD”) agreed to a global minimum tax rate of 15%. On December 20, 2021, OECD published its model rules on the agreed minimum tax known as the Global Anti-Base Erosion (“GloBE”) rules. The GloBE Rules are designed to be implemented into the domestic law of each jurisdiction to ensure large multinational enterprise groups are subject to a minimum effective tax rate of 15% in each jurisdiction where they operate. On December 15, 2022, the European Council approved its directive to implement Pillar Two of the GloBE rules regarding a 15% global minimum tax rate. January 1, 2024 marked the official effective date of the 15% global corporate minimum tax imposed by Pillar Two. Based on current legislation and available guidance, we have evaluated the impact of Pillar Two and determined there is no impact to the Company.
Current wording
On October 4, 2021, members of the Organisation for Economic Co-operation and Development (“OECD”) agreed to a global minimum tax rate of 15%. On December 20, 2021, OECD published its model rules on the agreed minimum tax known as the Global Anti-Base Erosion (“GloBE”) or Pillar Two rules. The Pillar Two rules are designed to be implemented into the domestic law of each jurisdiction to ensure large multinational enterprise groups are subject to a minimum effective tax rate of 15% in each jurisdiction where they operate. January 1, 2024 marked the official effective date of the 15% global corporate minimum tax imposed by the Pillar Two rules. Based on current legislation and available guidance, we have evaluated the impact of the Pillar Two rules and determined there is no impact to the Company.
Previous wording
During the first quarter of 2024, we exited the MEGALAC supplement portion of our Animal Nutrition business within our SPD segment. Net sales for the three months ended March 31, 2024 and March 31, 2023 were $7.1 and $11.4, respectively.
Current wording
During the first quarter of 2024, we exited the MEGALAC supplement portion of our Animal Nutrition business within our SPD segment. Net sales for the six months ended June 30, 2024 and 2023 were $7.6 and $21.6, respectively.
Previous wording
Net sales for the quarter ended March 31, 2024 were $1,503.3, an increase of $73.5 or 5.1% as compared to the same period in 2023. The components of the net sales increase are as follows:
Current wording
Net sales for the quarter ended June 30, 2024 were $1,511.2, an increase of $57.0 or 3.9% as compared to the same period in 2023. Net sales for the six months ended June 30, 2024 were $3,014.5, an increase of $130.5 or 4.5% over the comparable six month period of 2023. The components of the net sales increase are as follows:
Previous wording
(1)For the three months ended March 31, 2024, the volume change reflects increased product unit sales in all three segments.
Current wording
For both the three and six months ended June 30, 2024, the volume change reflects increased product unit sales in all three segments.
Previous wording
(2) For the three months ended March 31, 2024, price/mix was favorable in all three segments.
Current wording
For the three months ended June 30, 2024, price/mix was favorable in the Consumer Domestic and Consumer International segments, partially offset by the SPD segment. For the six months ended June 30, 2024, price/mix was favorable in all three segments.
Previous wording
Our gross profit was $687.0 for the three months ended March 31, 2024, a $65.0 increase as compared to the same period in 2023. Gross margin increased 220 basis points (“bps”) in the first quarter of 2024 compared to the same period in 2023, due to favorable price/mix/volume of 130 bps, the impact of productivity programs of 130 bps, and lower transportation costs of 80 bps, partially offset by higher manufacturing costs including labor and commodities of 110 bps and unfavorable foreign exchange of 10 bps.
Current wording
Our gross profit was $712.1 for the three months ended June 30, 2024, a $73.2 increase as compared to the same period in 2023. Gross margin increased 320 basis points (“bps”) in the second quarter of 2024 compared to the same period in 2023, due to a favorable tariff ruling of 180 bps, the impact of productivity programs of 120 bps, and favorable price/mix/volume of 80 bps, offset by the impact of higher manufacturing costs including labor and commodities of 50 bps and unfavorable foreign exchange of 10 bps. Gross profit was $1,399.1 for the six months ended June 30, 2024, a $138.2 increase compared to the same period in 2023. Gross margin increased 270 bps in the first six months of 2024 compared to the same period in 2023, due to the impact of productivity programs of 120 bps, favorable price/mix/volume of 110 bps, and a favorable tariff ruling of 90 bps, offset by the impact of higher manufacturing costs including labor and commodities of 40 bps and unfavorable foreign exchange of 10 bps.
Previous wording
Marketing expenses for the three months ended March 31, 2024 were $152.0, an increase of $29.7 or 24.3% as compared to the same period in 2023. Marketing expenses as a percentage of net sales in the first quarter of 2024 increased by 150 bps to 10.1% as compared to 8.6% in the same period in 2023 due to 200 bps on higher expense primarily from increased marketing spend to support new product introductions, partially offset by 50 bps of leverage on higher net sales.
Current wording
Marketing expenses for the three months ended June 30, 2024 were $152.4, an increase of $20.2 or 15.3% as compared to the same period in 2023. Marketing expenses as a percentage of net sales in the second quarter of 2024 increased by 100 bps to 10.1% as compared to 9.1% in the same period in 2023 due to 130 bps on higher expense primarily from increased marketing spend to support new product introductions, offset by 30 bps of leverage on higher net sales. Marketing expenses for the six months ended June 30, 2024 were $304.4, an increase of $49.9 or 19.6% as compared to the same period in 2023. Marketing expenses as a percentage of net sales for the first six months of 2024 increased by 130 bps to 10.1% as compared to 8.8% in the same period in 2023 due to 170 bps on higher expense, primarily from increased marketing spend to support new product introductions, offset by 40 bps of leverage on higher net sales.
Previous wording
SG&A expenses were $230.0 in the first quarter of 2024, an increase of $22.2 or 10.7% as compared to the same period in 2023. SG&A as a percentage of net sales increased 80 bps to 15.3% in the first quarter of 2024 as compared to 14.5% in the same period in 2023. The increase is due to 150 bps on higher expenses, partially offset by 70 bps of leverage associated with higher sales. The higher expenses for the three-month period ended March 31, 2024 are primarily due to growth investments in our international division and R&D.
Current wording
SG&A expenses were $222.8 in the second quarter of 2024, an increase of $9.7 or 4.6% as compared to the same period in 2023. SG&A as a percentage of net sales increased 10 bps to 14.7% in the second quarter of 2024 as compared to 14.6% in the same period in 2023. The increase is due to 60 bps on higher expenses, primarily due to growth investments in our international division, Research and Development ("R&D") and Information Technology ("IT"), and the Graphico acquisition, offset by 50 bps of leverage associated with higher sales. SG&A expenses for the first six months of 2024 were $452.8, an increase of $31.9 or 7.6% as compared to the same period in 2023. SG&A as a percentage of net sales increased 40 bps to 15.0% in the first six months of 2024 compared to 14.6% in 2023 due to 100 bps on higher expenses, primarily due to growth investments in our international division, R&D and IT, offset by 60 bps of leverage associated with higher sales.
Previous wording
Other income increased $1.7 for the three months ended March 31, 2024 as compared to the same period in 2023 primarily due to higher investment income.
Current wording
Other income for the three and six months ended June 30, 2024 increased $2.0 and $3.7, respectively, as compared to the same periods in 2023, primarily due to higher investment income.
Previous wording
Interest expense for the three months ended March 31, 2024 decreased $3.8 to $25.0, as compared to the same period in 2023, primarily due to lower average outstanding debt.
Current wording
Interest expense for the three and six months ended June 30, 2024 decreased $4.7 and $8.5 to $23.2 and $48.2, respectively, as compared to the same periods in 2023, primarily due to lower average outstanding debt.
Previous wording
The effective tax rate for the three months ended March 31, 2024 was 19.9%, compared to 24.4% in the same period in 2023. The decrease in the tax rate is primarily due to the benefit from higher stock option exercises.
Current wording
The effective tax rate for the three months ended June 30, 2024 was 24.0%, compared to 17.9% in the same period in 2023. The effective tax rate for the six months ended June 30, 2024 was 22.1%, compared to 21.1% in the same period in 2023.
Previous wording
The Corporate segment income consists of equity in earnings of affiliates. As of March 31, 2024, we held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of Armand and ArmaKleen, totaled $1.1 and $4.4 for the three months ended March 31, 2024 and 2023, respectively, and are included in the Corporate segment. Certain subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment. These sales are eliminated from the Consumer International segment results set forth below.
Current wording
The Corporate segment income consists of equity in earnings of affiliates. As of June 30, 2024, we held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of Armand and ArmaKleen, totaling $3.1 and $2.0 for the three months ended June 30, 2024 and 2023, respectively, and $4.2 and $6.4 for the six months ended June 30, 2024 and 2023, respectively, are included in the Corporate segment. Certain subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment. These sales are eliminated from the Consumer International segment results set forth below.
Previous wording
Segment net sales and income before income taxes for the three months ended March 31, 2024 and March 31, 2023 are as follows:
Current wording
Segment net sales and income before income taxes for the three and six months ended June 30, 2024 and June 30, 2023 are as follows:
Previous wording
Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table, were $5.6 and $3.6 for the three months ended March 31, 2024 and March 31, 2023, respectively.
Current wording
Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table, were $7.0 and $3.4 for the three months ended June 30, 2024 and June 30, 2023, respectively, and were $12.6 and $7.0 for the six months ended June 30, 2024 and June 30, 2023, respectively.
Previous wording
Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen for the three months ended March 31, 2024 and March 31, 2023.
Current wording
Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen for the three and six months ended June 30, 2024 and June 30, 2023.
Previous wording
Consumer Domestic net sales in the first quarter of 2024 were $1,165.2, an increase of $48.3 or 4.3% as compared to the same period in 2023. The components of the net sales change are the following:
Current wording
Consumer Domestic net sales in the second quarter of 2024 were $1,170.6, an increase of $42.4 or 3.8% as compared to the same period in 2023. Consumer Domestic net sales for the six months ended June 30, 2024 were $2,335.8, an increase of $90.7 or 4.0% as compared to the same period in 2023. The components of the net sales change are the following:
Previous wording
The increase in net sales for the three months ended March 31, 2024, includes growth from THERABREATH® mouth wash, HERO® acne treatment products, ARM & HAMMER® cat litter, ARM & HAMMER® baking soda, XTRA® liquid detergent and BATISTE® dry shampoo, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy dietary supplements and WATERPIK® water flossers and showerheads.
Current wording
The increase in net sales for the three months ended June 30, 2024, includes growth from THERABREATH® mouth wash, ARM & HAMMER® Cat Litter, HERO® acne treatment products, ARM & HAMMER® Liquid Detergent, and XTRA® liquid detergent, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy dietary supplements, FINISHING TOUCH FLAWLESS® Hair Removal Products and WATERPIK® Shower Heads. The increase in net sales for the six-month period ending June 30, 2024, includes growth from THERABREATH® mouth wash, HERO® acne treatment products, ARM & HAMMER® Cat Litter, XTRA® liquid detergent, ARM & HAMMER® Liquid Detergent, and BATISTE® Dry Shampoo, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, WATERPIK® Shower Heads, and FINISHING TOUCH FLAWLESS® Hair Removal Products.
Previous wording
Consumer Domestic income before income taxes for the first quarter of 2024 was $239.2, an increase of $10.5 as compared to the first quarter of 2023. The increase is due primarily to the impact of higher sales volumes of $21.0, the benefit of productivity programs of $18.2, favorable price/mix of $9.2 and favorable interest and other expenses of $5.8, offset by higher marketing expenses of $24.7, and higher SG&A expenses of $19.7.
Current wording
Consumer Domestic income before income taxes for the second quarter of 2024 was $273.2, a $42.5 increase as compared to the second quarter of 2023. The increase is primarily due to a favorable tariff ruling of $26.1, the impact of higher sales volumes of $21.1, the benefit of productivity programs of $16.4, favorable interest and other expenses of $4.1 and favorable price/mix of $0.8, partially offset by higher marketing expenses of $15.1, higher SG&A expenses of $12.0 and higher manufacturing and distribution expenses of $2.6. For the six-month period ended June 30, 2024, income before income taxes was $512.4, a $53.0 increase as compared to the first six months of 2023. The increase is due primarily to the impact of higher sales volumes of $42.0, a favorable tariff ruling of $26.1, the benefit of productivity programs of $34.6, favorable interest and other expenses of $11.6 and favorable price/mix of $10.0, partially offset by higher marketing expenses of $39.8, higher SG&A expenses of $31.7 and higher manufacturing and distribution expenses of $1.9.
Previous wording
Consumer International net sales were $255.0 in the first quarter of 2024, an increase of $24.4 or 10.6% as compared to the same period in 2023. The components of the net sales change are the following:
Current wording
Consumer International net sales were $263.7 in the second quarter of 2024, an increase of $21.8 or 9.0% as compared to the same period in 2023. Consumer International net sales in the first six months of 2024 were $518.7, an increase of $46.2 or 9.8% as compared to the same period in 2023. The components of the net sales change are the following:
Previous wording
Excluding the impact of foreign exchange rates, sales growth is driven by HERO® acne treatment products and STERIMAR® nasal congestion relief in Europe, STERIMAR® nasal congestion relief in Mexico, STERIMAR® nasal congestion relief, ULTRAMAX® antiperspirant deodorant, and THERABREATH® mouth wash in the Global Markets Group (“GMG”) business, and HERO® acne treatment products and OXICLEAN® stain removers in Canada.
Current wording
Excluding the impact of foreign exchange rates, sales growth in the second quarter ended June 30, 2024 was driven by VITAFUSION® and L’IL CRITTERS® gummy vitamins, THERABREATH® mouth wash, STERIMAR® nasal congestion relief, OXICLEAN® stain removers and ARM & HAMMER® Baking Soda in GMG, HERO® acne treatment products and WATERPIK® Flossers in Canada, ARM & HAMMER® Liquid Detergent and STERIMAR® nasal congestion relief in Mexico, and HERO® acne treatment products in Europe and Australia. The increase in net sales for the six-month period ending June 30,2024, was driven by STERIMAR® nasal congestion relief, and VITAFUSION® and L’IL CRITTERS® gummy vitamins in GMG, STERIMAR® nasal congestion relief and ARM & HAMMER® Liquid Detergent in Mexico, HERO® acne treatment products and ANUSOL in Europe, HERO® acne treatment products and WATERPIK® Flossers in Canada, and HERO® acne treatment products in Australia.
Previous wording
SPD net sales were $83.1 in the first quarter of 2024, an increase of $0.8 or 1.0% as compared to the same period in 2023. The components of the net sales change are the following:
Current wording
SPD net sales were $76.9 in the second quarter of 2024, a decrease of $7.2 or 8.6% as compared to the same period in 2023. SPD net sales were $160.0 for the first six months of 2024, a decrease of $6.4, or 3.8% as compared to the same period in 2023. The components of the net sales change are the following:
Previous wording
The Corporate segment includes equity in earnings of affiliates from Armand and ArmaKleen in the first three months of 2024 and 2023, respectively. The Corporate segment income before income taxes was $1.1 in the first quarter of 2024, as compared to $4.4 in the same period in 2023.
Current wording
The Corporate segment includes equity in earnings of affiliates from Armand and ArmaKleen in the three and six months of 2024 and 2023. The Corporate segment income before income taxes was $3.1 in the second quarter of 2024, as compared to $2.0 in the same period in 2023. The Corporate segment income before income taxes was $4.2 for the first six months of 2024, as compared to $6.4 in the same period in 2023.
Previous wording
As of March 31, 2024, we had $349.7 in cash and cash equivalents, and approximately $1,495.0 available through the Revolving Credit Facility and our commercial paper program. To preserve our liquidity, we invest cash primarily in government money market funds, prime money market funds, short-term commercial paper and short-term bank deposits.
Current wording
As of June 30, 2024, we had $491.7 in cash and cash equivalents, and approximately $1,495.0 available through the Revolving Credit Facility and our commercial paper program. To preserve our liquidity, we invest cash primarily in government money market funds, prime money market funds, short-term commercial paper and short-term bank deposits.
Previous wording
The current economic environment presents risks that could have adverse consequences for our liquidity. See “Unfavorable economic conditions could adversely affect demand for our products” under “Risk Factors” in Item 1A of the Form 10-K. We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our customers, suppliers and other third-party relationships, implementing gross margin enhancement strategies and developing new opportunities for growth. We do not anticipate that current economic conditions will adversely affect our ability to comply with the financial covenant in the Credit Agreement because we currently are, and anticipate that we will continue to be, in compliance with the maximum leverage ratio requirement under the Credit Agreement.
Current wording
The current economic environment presents risks that could have adverse consequences for our liquidity. See “Unfavorable economic conditions could adversely affect demand for our products” under “Risk Factors” in Item 1A of the Form 10-K. We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our customers, suppliers and other third-party relationships, implementing gross margin enhancement strategies and developing new opportunities for growth. We do not anticipate that current economic conditions will adversely affect our ability to comply with the financial covenant in the Credit Agreement. We currently are, and anticipate that we will continue to be, in compliance with the maximum leverage ratio requirement under the Credit Agreement.
Previous wording
On October 28, 2021, the Board authorized the Company's share repurchase program, under which we may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program. The 2021 Share Repurchase Program did not modify our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive plans. There have been no stock repurchases in 2024.
Current wording
On October 28, 2021, the Board authorized the Company’s share repurchase program, under which we may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program. The 2021 Share Repurchase Program did not modify our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under our incentive plans. There have been no stock repurchases in 2024 under the 2021 Share Repurchase Program.
Previous wording
Net Cash Provided by Operating Activities– Our primary source of liquidity is the cash flow provided by operating activities, which is dependent on net income and changes in working capital. Our net cash provided by operating activities in the three months ended March 31, 2024 decreased by $10.1 to $263.0 as compared to $273.1 in the same period in 2023 as higher working capital was partially offset by an increase in cash earnings (net income adjusted for non-cash items). The increase in working capital is primarily related to higher accounts receivable balances, as we reduced our accounts receivable factoring program in response to higher interest rates, and higher incentive compensation payments in 2024 compared to 2023 partially offset by a lower investment in inventory. We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended March 31, 2024 and 2023:
Current wording
Net Cash Provided by Operating Activities– Our primary source of liquidity is the cash flow provided by operating activities, which is dependent on net income and changes in working capital. Our net cash provided by operating activities in the six months ended June 30, 2024 decreased by $9.3 to $499.9 as compared to $509.2 in the same period in 2023 as an increase in cash earnings (net income adjusted for non-cash items) was more than offset by higher working capital. The higher working capital is primarily related to higher accounts receivable balances as we reduced our accounts receivable factoring program in response to higher interest rates and the tariff refund receivable. In addition, we had higher incentive compensation payments in 2024 compared to 2023. We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended June 30, 2024 and 2023:
Previous wording
Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a two-period average method, increased two days from the prior year. The increase is due to higher accounts receivable balances, as we reduced our accounts receivable factoring program in response to higher interest rates, and lower accounts payable generally due to timing of payments partially offset by a lower investment in inventory. We continue to focus on reducing our working capital requirements.
Current wording
Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a two-period average method, increased one day from the prior year. The increase in DSO is related to a reduction in our accounts receivable factoring program in response to higher interest rates and the tariff refund receivable. The decrease in DIO is a result of the timing of inventory purchases for most of our brands and a reduction in inventory purchases related to our discretionary brands. We continue to focus on reducing our working capital requirements.
Previous wording
Net Cash Used in Investing Activities – Net cash used in investing activities during the first three months of 2024 was $46.8, primarily reflecting $46.3 for property, plant and equipment additions. Net cash used in investing activities during the first three months of 2023 was $29.6, primarily reflecting $25.0 for property, plant and equipment additions.
Current wording
Net Cash Used in Investing Activities – Net cash used in investing activities during the first six months of 2024 was $91.5, primarily reflecting $76.6 for property, plant and equipment additions and $19.9 for the Graphico Acquisition, partially offset by $6.6 of proceeds from the sale of assets. Net cash used in investing activities during the first six months of 2023 was $69.2, primarily reflecting $63.2 for property, plant and equipment additions.
Previous wording
Net Cash Used in Financing Activities – Net cash used in financing activities during the first three months of 2024 was $209.1 reflecting $200.0 of net debt payments, $69.0 of cash dividend payments, partially offset by $59.9 of proceeds from stock option exercises. Net cash used in financing activities during the first three months of 2023 was $311.7 reflecting $255.6 of net debt payments, $66.3 of cash dividend payments, partially offset by $10.2 of proceeds from stock option exercises.
Current wording
Net Cash Used in Financing Activities – Net cash used in financing activities during the first six months of 2024 was $257.4 reflecting $197.7 of net debt payments and $138.2 of cash dividend payments, partially offset by $79.5 of proceeds from stock option exercises. Net cash used in financing activities during the first six months of 2023 was $315.4 reflecting $270.6 of net debt payments and $133.0 of cash dividend payments, partially offset by $88.3 of proceeds from stock option exercises.