CHURCH DWIGHT CO INC DE

Previous wording

We develop, manufacture and market a broad range of consumer household and personal care products and specialty products focused on animal and food production, chemicals and cleaners. Our well-recognized brands include ARM & HAMMER® baking soda, cat litter, laundry detergent, carpet deodorizer and other baking soda-based products; OXICLEAN® stain removers, cleaning solutions, laundry detergents and bleach alternatives; VITAFUSION® and L’IL CRITTERS® gummy dietary supplements for adults and children, respectively; BATISTE® dry shampoo; WATERPIK® water flossers and showerheads; THERABREATH® oral care products; HERO® acne treatment products; TROJAN® condoms, lubricants and vibrators; SPINBRUSH® battery-operated toothbrushes; FIRST RESPONSE® home pregnancy and ovulation test kits; NAIR® depilatories; ORAJEL® oral analgesic; XTRA® laundry detergent; and ZICAM® cold shortening and relief products. Seven of those brands are designated as "power brands" because they compete in large categories, and we believe they have the potential for significant global expansion. Those seven brands are ARM & HAMMER®; OXICLEAN®; VITAFUSION® and L’IL CRITTERS®; BATISTE®; WATERPIK®; THERABREATH®; and HERO® and represent approximately 70% of our net sales and profits.

Current wording

We develop, manufacture and market a broad range of consumer household and personal care products and specialty products focused on animal and food production, chemicals and cleaners. Our well-recognized brands include ARM & HAMMER® baking soda, cat litter, laundry detergent, carpet deodorizer and other baking soda-based products; OXICLEAN® stain removers, cleaning solutions, laundry detergents and bleach alternatives; BATISTE® dry shampoo; WATERPIK® water flossers and showerheads; THERABREATH® oral care products; HERO® acne treatment products; VITAFUSION® and L’IL CRITTERS® gummy dietary supplements for adults and children, respectively; TROJAN® condoms, lubricants and vibrators; SPINBRUSH® battery-operated toothbrushes; FIRST RESPONSE® home pregnancy and ovulation test kits; NAIR® depilatories; ORAJEL® oral analgesic; XTRA® laundry detergent; and ZICAM® cold shortening and relief products. Seven of those brands are designated as "power brands" because they compete in large categories, and we believe they have the potential for significant global expansion. Those seven brands are ARM & HAMMER®; OXICLEAN®; BATISTE®; WATERPIK®; THERABREATH®; HERO® and VITAFUSION® and L’IL CRITTERS®; and represent approximately 70% of our net sales and profits.

Previous 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.

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 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”) 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.

Current wording

In October 2021, members of the Organisation for Economic Co-operation and Development (“OECD”) agreed to a global minimum tax rate of 15%. In December 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. In December 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive. January 1, 2024 marked the official effective date of the 15% global corporate minimum tax imposed by the EU's Pillar Two Directive. We are monitoring developments and evaluating the impacts of the Pillar Two rules on our tax rate. We have evaluated the impact of the Pillar Two rules based on current legislation and available guidance, and do not anticipate a material 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 six months ended June 30, 2024 and 2023 were $7.6 and $21.6, 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 three months ended September 30, 2024 and 2023 were $0.0 and $8.1, respectively. Net sales for the nine months ended September 30, 2024 and 2023 were $7.6 and $29.7, respectively.

Previous wording

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 wording

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. Net sales for the three months ended September 30, 2024 and 2023 were $0.0 and $3.3, respectively. Net sales for the nine months ended September 30, 2024 and 2023 were $6.4 and $9.2, respectively.

Previous wording

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 wording

During the second quarter of 2024, we received a favorable tariff ruling from the U.S. government associated with certain products imported from China, which resulted in $37.6 of cash refunds (pre tax) in the nine months ended September 30,2024. The refunds resulted in a $3.2 and $29.3 reduction of Cost of goods sold during the three and nine months ended September 30, 2024 and an increase in Interest income from interest of $4.6 during both the three and nine months ended September 30, 2024.

Previous 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:

Current wording

Net sales for the quarter ended September 30, 2024 were $1,510.6, an increase of $54.7 or 3.8% as compared to the same period in 2023. Net sales for the nine months ended September 30, 2024 were $4,525.1, an increase of $185.2 or 4.3% over the comparable nine month period of 2023. The components of the net sales increase are as follows:

Previous wording

For both the three and six months ended June 30, 2024, the volume change reflects increased product unit sales in all three segments.

Current wording

For both the three and nine months ended September 30, 2024, the volume change reflects increased product unit sales in all three segments.

Previous 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.

Current wording

For both the three and nine months ended September 30, 2024, price/mix was favorable in all three segments.

Previous 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.

Current wording

Our gross profit was $683.1 for the three months ended September 30, 2024, a $36.8 increase as compared to the same period in 2023. Gross margin increased 80 basis points (“bps”) in the third quarter of 2024 compared to the same period in 2023, due to the positive impact of productivity programs of 140 bps, favorable price/volume/mix of 130 bps, a favorable tariff ruling of 20 bps, and benefits from the Graphico Acquisition of 10 bps, offset by the impact ofhigher manufacturing costs, including labor and commodities, of 220 bps. Gross profit was $2,082.2 for the nine months ended September 30, 2024, a $175.0 increase compared to the same period in 2023. Gross margin increased 210 bps in the first nine months of 2024 compared to the same period in 2023, due to the impact of productivity programs of 130 bps, favorable price/volume/mix of 120 bps, and a favorable tariff ruling of 70 bps, offset bythe impact of higher manufacturing costs including labor and higher commodities of 100 bps and unfavorable foreign exchange of 10 bps.

Previous 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.

Current wording

Marketing expenses for the three months ended September 30, 2024 were $185.8, an increase of $18.0 or 10.7% as compared to the same period in 2023. Marketing expenses as a percentage of net sales in the third quarter of 2024 increased by 80 bps to 12.3% as compared to 11.5% in the same period in 2023 due to 120 bps on higher expense primarily from increased marketing spend to support new product introductions, offset by 40 bps of leverage on higher net sales. Marketing expenses for the nine months ended September 30, 2024 were $490.2, an increase of $67.9 or 16.1% as compared to the same period in 2023. Marketing expenses as a percentage of net sales for the first nine months of 2024 increased by 110 bps to 10.8% as compared to 9.7% in the same period in 2023 due to 150 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 $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.

Current wording

SG&A expenses were $231.7 in the third quarter of 2024, an increase of $9.0 or 4.0% as compared to the same period in 2023. SG&A as a percentage of net sales was 15.3% in the third quarter of 2024 and 2023. SG&A expenses were higher by 60 bps, primarily due togrowth investments in our international division, Research and Development ("R&D") and Information Technology ("IT"), and the Graphico acquisition, offset by 60 bps of leverage associated with higher sales. SG&A expenses for the first nine months of 2024 were $684.5, an increase of $40.9 or 6.4% as compared to the same period in 2023. SG&A as a percentage of net sales increased 30 bps to 15.1% in the first nine months of 2024 compared to 14.8% in 2023 due to 90 bps on higher expenses, primarilydue togrowth investments in our international division, R&D and IT, offset by 60 bps of leverage associated with higher sales.

Previous 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.

Current wording

Interest income for the three and nine months ended September 30, 2024 increased $6.1 and $10.5 to $10.6 and $17.7, respectively, as compared to the same periods in 2023, due to higher interest income primarily associated with the favorable Waterpik tariff ruling and higher interest rates.

Previous 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.

Current wording

Interest expense for the three and nine months ended September 30, 2024 decreased $3.8 and $12.3 to $23.4 and $71.6, respectively, as compared to the same periods in 2023, primarily due to lower average outstanding debt.

Previous 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.

Current wording

The Corporate segment income consists of equity in earnings of affiliates. As of September 30, 2024, we held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of Armand and ArmaKleen, totaling $3.0 and $1.7 for the three months ended September 30, 2024 and 2023, respectively, and $7.2 and $8.1 for the nine months ended September 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 and six months ended June 30, 2024 and June 30, 2023 are as follows:

Current wording

Segment net sales and income (loss) before income taxes for the three and nine months ended September 30, 2024 and September 30, 2023 are as follows:

Previous 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.

Current wording

Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table, were $7.0 and $4.7 for the three months ended September 30, 2024 and September 30, 2023, respectively, and were $19.6 and $11.7 for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Previous wording

In determining income before income taxes, interest expense, investment earnings and certain aspects of other income and expense were allocated among the segments based upon each segment’s relative income from operations.

Current wording

In determining income (loss) before income taxes, interest expense, investment earnings and certain aspects of other income and expense were allocated among the segments based upon each segment’s relative income (loss) from operations.

Previous 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.

Current wording

Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen for the three and nine months ended September 30, 2024 and September 30, 2023. The Company’s 50% interest in Armakleen was sold to an unrelated third party in October of 2024. The transaction is not material to the Company’s results of operations or cash flows.

Previous 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:

Current wording

Consumer Domestic net sales in the third quarter of 2024 were $1,170.8, an increase of $37.7 or 3.3% as compared to the same period in 2023. Consumer Domestic net sales for the nine months ended September 30, 2024 were $3,506.6, an increase of $128.4 or 3.8% as compared to the same period in 2023. The components of the net sales change are the following:

Previous wording

The 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.

Current wording

The increase in net sales for three months ended September 30, 2024 includes growth from HERO® acne treatment products, THERABREATH® mouth wash, ZICAM® cold shortening and relief products, SPINBRUSH® battery-operated toothbrushes, ARM & HAMMER® baking soda, and ARM & HAMMER® scent boosters, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, and FINISHING TOUCH FLAWLESS® hair removal products. The increase in net sales for the nine-month period ending September 30, 2024, includes growth from THERABREATH® mouth wash, HERO® acne treatment products, ARM & HAMMER® cat litter, ARM & HAMMER® baking soda, and BATISTE® dry shampoo, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, FINISHING TOUCH FLAWLESS® hair removal products, and WATERPIK® Shower Heads.

Previous 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.

Current wording

Consumer Domestic loss before income taxes for the third quarter of 2024 was $(107.1), a decrease of $310.5 as compared to the third quarter of 2023. The decrease is dueto the VMS non-cash intangible and PP&E impairment charges of $327.4. Excluding the non-cash impairment charges, Consumer Domestic income before income taxes increased by $16.9 and was impacted byhigher sales volumes of $22.1, the benefit of productivity programs of $19.6, favorable price/mix of $10.8, and favorable interest and other expenses of $10.6 (including interest related to tariff recoveries of $4.6), partially offset by the impact ofhigher manufacturing and distribution expenses of $28.1, higher marketing expenses of $13.7, andhigher SG&A expenses of $4.5. For the nine-month period ended September 30, 2024, income before income taxes was $405.3, a $257.5 decrease as compared to the first nine months of 2023. The decrease is due tothe VMS non-cash intangible and PP&E impairment charges of $327.4. Excluding the non-cash impairment charges, Consumer Domestic income before income taxes increased $69.9 and was impacted byhigher sales volumes of $64.1, the benefit of productivity programs of $54.2, favorable price/mix of $20.5, a favorable tariff ruling of $29.3 and favorable interest and other expenses of $22.2 (including interest related to tariff recoveries of $4.6), partially offset by higher marketing expenses of $53.4, higher SG&A expenses of $34.1, andhigher manufacturing and distribution expenses of $33.0.

Previous 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:

Current wording

Consumer International net sales were $267.7 in the third quarter of 2024, an increase of $23.3 or 9.5% as compared to the same period in 2023. Consumer International net sales in the first nine months of 2024 were $786.4, an increase of $69.5 or 9.7% 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 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.

Current wording

Excluding the impact of foreign exchange rates and the Graphico acquisition, sales growth in the third quarter ended September 30, 2024 was driven by OXICLEAN® stain removers, THERABREATH® mouth wash, ULTRAMAX® antiperspirant deodorant, and VITAFUSION® and L’IL CRITTERS® gummy vitamins, in GMG (the "Global Markets Group"), and HERO® acne treatment products in Europe, Canada and Australia. The increase in net sales for the nine-month period ending September 30, 2024, was driven by OXICLEAN® stain removers, THERABREATH® mouth wash, ULTRAMAX® antiperspirant deodorant, and VITAFUSION® and L’IL CRITTERS® gummy vitamins, in GMG, HERO® acne treatment products in Europe, HERO® acne treatment products in Canada, and THERABREATH® mouth wash in Mexico.

Previous wording

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 wording

Consumer International loss before income taxes was $(4.7) in the third quarter of 2024, a $27.4 decrease as compared to the third quarter of 2023 due to the VMS non-cash intangible and PP&E impairment charges of $29.7. Excluding the non-cash impairment charges, Consumer International income before income taxes increased $2.3 and was impacted by higher sales volumes of $6.5, a favorable price/mix of $4.5, lower manufacturing and commodity costs of $1.6, and favorable interest and other expenses of $1.1, offset by the impact of higher SG&A expenses of $6.0, higher marketing expenses of $4.3 and unfavorable foreign exchange rates of $1.1. For the first nine months of 2024, income before income taxes was $61.2, a $17.9 decrease as compared to the same period in 2023. The decrease is due to the VMS non-cash intangible and PP&E impairment charges of $29.7. Excluding the non-cash impairment charges, Consumer International income before income taxes increased $11.8, and was impacted by a favorable price/mix of $26.6, higher sales volumes of $17.5, favorable interest and other expenses of $1.7, and lower manufacturing and commodity costs of $1.3, partially offset by higher SG&A expenses of $17.2, higher marketing expenses of $16.1 and unfavorable foreign exchange rates of $2.0.

Previous 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:

Current wording

SPD net sales were $72.1 in the third quarter of 2024, a decrease of $6.3 or 8.0% as compared to the same period in 2023. SPD net sales were $232.1 for the first nine months of 2024, a decrease of $12.7, or 5.2% as compared to the same period in 2023. The components of the net sales change are the following:

Previous wording

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 wording

Net sales excluding product line divestitures increased in the three and nine months ended September 30, 2024 primarily due to growth in our animal nutrition and specialty chemicals segments.

Previous wording

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 wording

SPD income before income taxes was $7.4 in the third quarter of 2024, an increase of $1.2 as compared to the same period in 2023 due to a favorable price/mix of $2.6, favorable manufacturing costs of $1.0, lower SG&A and other costs of $0.5, and lower marketing costs of $0.1, offset by the impact of lower sales volumes of $3.0 due to the exit of certain product lines. SPD income before income taxes was $29.5 in the first nine months of 2024, an increase of $7.3 as compared to the same period in 2023 to favorable price/product mix of $5.9, lower marketing expenses of $1.6, lower SG&A and other costs of $1.9, and favorable manufacturing costs of $0.2, partially offset by the impact of lower sales volumes of $2.2 due to the exit of certain product lines.

Previous 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.

Current wording

The Corporate segment includes equity in earnings of affiliates from Armand and ArmaKleen in the three and nine months of 2024 and 2023. The Corporate segment income before income taxes was $3.0 in the third quarter of 2024, as compared to $1.7 in the same period in 2023. The Corporate segment income before income taxes was $7.2 for the first nine months of 2024, as compared to $8.1 in the same period in 2023. In October 2024 the Company sold its 50% interest in Armakleen to an unrelated third party. The transaction is not material to the Company’s results of operations or cash flows.

Previous 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.

Current wording

As of September 30, 2024, we had $752.1 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. 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 our Annual Report on 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 interest coverage ratio requirement under the Credit Agreement.

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 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:

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 nine months ended September 30, 2024 increased by $68.8 to $863.9 as compared to $795.1 in the same period in 2023 primarily due to an increase in cash earnings (net income adjusted for non-cash items). We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended September 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 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.

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 2 days 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. 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 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.

Current wording

Net Cash Used in Investing Activities – Net cash used in investing activities during the first nine months of 2024 was $138.1, primarily reflecting $125.2 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 nine months of 2023 was $128.4, primarily reflecting $121.5 property, plant and equipment additions.

Previous 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.

Current wording

Net Cash Used in Financing Activities – Net cash used in financing activities during the first nine months of 2024 was $318.3 reflecting $200.4 of net debt payments and $207.4 of cash dividend payments, partially offset by $90.3 of proceeds from stock option exercises. Net cash used in financing activities during the first nine months of 2023 was $363.0, reflecting $199.9 of cash dividend payments and $270.6 of net debt repayments, partially offset by $107.6 of proceeds from stock option exercises.