Good morning, ladies and gentlemen, and welcome to the Church & Dwight conference call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, Church & Dwight's financial objectives, the completion of the acquisition, the financing of the acquisition and forecasts, and the impact of the TheraBreath acquisition. As you know, risks and uncertainties involved in Church & Dwight's business, including risks relating to the acquisition and integration of TheraBreath and those discussed in the Risk Factors section in our annual report on Form 10-K and other filings with the SEC, may affect the matters referred to in these forward-looking statements. As a result, the company's performance and the impact of TheraBreath acquisition may materially differ from those expressed or indicated by such forward-looking statements. Church & Dwight will be utilizing both GAAP and non-GAAP financial measures in its discussion of TheraBreath. The company believes the presentation of TheraBreath's non-GAAP financial measures provides useful additional information to investors about the financial performance of TheraBreath and trends in its operations. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be used as a replacement for corresponding GAAP measures. I would now like to introduce your host for today's call, Mr. Matt Farrell, Chief Executive Officer of Church & Dwight. Please go ahead. Good morning, everyone. We have some exciting news today. This morning, we announced that we've entered into an agreement to acquire TheraBreath. I'll begin with my thoughts on the acquisition, and then I'll turn the call over to Rick Dierker, our CFO. Rick will provide the financial details, and then we'll open the call for some Q&A. Now TheraBreath. We see TheraBreath as a perfect tuck-in acquisition for our oral care business with $100 million of sales projected for 2022, high gross margins, and the ability to deliver annual sales growth that exceeds our 3% evergreen model thereafter. TheraBreath competes in the broad mouthwash category, which is a $1.6 billion category. The alcohol-free subcategory has been a steady grower, averaging about 4.5% annual growth the last few years. TheraBreath's double-digit growth has outpaced the category over the past few years, and the brand's growth has largely been driven by incremental retailer distribution. As many of you know, acquisitions have been a key driver of Church & Dwight's consistently strong shareholder returns. This acquisition meets the company's long-standing acquisition criteria, which are number one or number two brand, asset light, has to grow at or above our 3% evergreen target, and is expected to be gross margin accretive to the company. Here are the relevant details for TheraBreath. TheraBreath is the number two brand in the non-alcohol mouthwash category in the U.S. with a 14% share. We expect 15% net sales growth in 2022, which follows double-digit growth for each of the past three years. Strong consumption and steady retail distribution gains remain tailwinds for this business. ACV today stands at 68%, and we believe we can continue to drive additional distribution by leveraging Church & Dwight's capabilities, which exceed those of the former owner. Currently, less than 10% of sales are international, so we expect to leverage our international footprint for added distribution. The product is currently co-packed, which makes it asset light, and the gross margin is in excess of our corporate gross margin. We're very excited about adding the company's 14th power brand, which we expect to fully integrate by mid-2022 while retaining the expertise critical to the TheraBreath business. Next up is Rick. Thank you, Matt, and good morning, everybody. I'm gonna provide a few comments on the transaction, in particular valuation, synergies, and leverage. I'll start with valuation. The purchase price for this acquisition is about $580 million, as you read in the release, and we expect a discounted cash tax benefit of $85 million, making the effective price $495 million. TheraBreath's annual net sales are projected to be $100 million in 2022, and EBITDA is expected to be $36 million, excluding $7 million in transition costs. This represents a synergized EBITDA multiple of 13.7x. In terms of synergies, we expect to leverage our in-house manufacturing footprint, our distribution network, operating discipline, and support functions to generate anticipated annual cost savings of approximately $6 million by 2023, made up of SG&A and supply chain savings. We will manufacture a portion of the volume in-house at our own oral care facilities. For 2021, our outlook, the acquisition is expected to impact Q4 of 2021 earnings per share by $0.03, largely due to a one-time transition and transaction cost and some incremental marketing. Turning to 2022, we'll give our 2022 outlook in February. Specifically on this acquisition, TheraBreath is expected to be approximately 2% accretive to cash earnings and neutral to 2022 EPS and accretive in 2023. Neutral to EPS in 2022 is due to intangible amortization and interest expense, as well as one-time transition expenses and incrementally higher marketing spend. Finally, in terms of leverage, we expect to end the year with debt-to-EBITDA of 2.2x and less than 2x by the end of 2022. With that, we'll now open the call to questions. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question is from Kevin Grundy with Jefferies. Your line is now open. Good morning, Kevin. I can't hear Kevin. Moving on to the next question. Yeah, operator, you can go to the next call. Oh. Yes, sir. We have Andrea Teixeira with J.P. Morgan. Your line is open. Congrats. I was just hoping if you can elaborate a little bit more, Rick, on the cost of financing. I guess one for you, Matt, you said you expect to produce part of the to make it part of your of the product. Can you update us on how much you think you can produce and what is the impact on the gross margin as we go forward? Yeah. Andrea, so on the first one, you know, we're in the middle of it right now, but we probably anticipate the cost of financing to be anywhere between 2.5%-3%. And then in terms of in-house synergies, right, we said $6 million of synergies by 2023. About half of that is COGS synergies and half of that is SG&A. The predominant reason of COGS is 'cause of the in-house manufacturing. As far as the percentage we're bringing in-house, that really hasn't been nailed down yet. We have some flexibility there. We have facilities in Canada and Montreal, where we can make the product. In 2022, that's helpful. You expect to expand even more internationally or the 10% will be over the next few years, and then as you go, you're gonna be mostly expanding your ACV in the U.S.? A fine point also on the DTC. I understand that they also sell online. Is that something you wanna expand even further? Is that below your? I believe you reached 18 in the last earnings call. You talked about it. What is your goal for TheraBreath? Well, we said 15% growth in 2022, and we would expect at least high single digits to double-digit growth in 2023. As far as where the opportunities are, you know, with the 68% ACV, it means we do have opportunities in certain classes of trade to expand. Those, Andrea, would be food class of trade, dollar, and club. As far as international goes, the product actually is in many major markets like Europe or North America, even Asia, but at a very small scale. That also is an immediate opportunity for us to expand. Online is 20% today of the business, so it's well-developed there. We can expect that will grow in proportion to the rest of the business. Super helpful. The 20% is mostly their own or there's. What is the balance between- No, that would include Amazon and also their own therabreath.com. Yeah. In the 20%. retailer.com as well. Yeah. Okay, great. Thank you so much. I'll pass it on. Okay, Andrea. We have Kevin Grundy with Jefferies back online. Your line is open. Hey, good morning. Can you guys hear me okay? Yeah. Sorry about that before. Rick, first one for you, maybe just talk a little bit about cost synergies, areas of cost synergies, visibility on those, timing. I think you indicated it'll take a couple years to reach the $6 million run rate, and then maybe any potential areas of upside you think may present itself. Yeah. No, I think, you know, we partially answered that with Andrea. In total- Sorry, I missed that then. We said $6 million by 2023. About half of that is supply chain related. When you think about supply chain related synergies, it's really a portion of the volume, right? We have great co-packer partners, and we're gonna keep those guys, but we're gonna also bring a part of the volume in-house. A piece of the COGS synergies are in-house manufacturing. A piece of it's gonna be distribution, right? We serve almost 100% of the same customers and retailers. From a distribution network perspective, that's also a synergy. Those are some detail. Of course, you know, we buy a lot of bottles as well from a procurement perspective. That kinda gives you some color. We're gonna get about $4 million of the six by 2022, actually pretty rapidly. Okay. That's helpful, Rick. Maybe just talk about the price point of the product. What sort of gets you guys most excited when you think about the total addressable market awareness at this point, trial, conversion rates, things like that. Maybe just comment also on the product mix. You highlighted, which seems to be predominantly on the mouth rinse side. When I look at the product offerings on the website, it does seem like there's other products in oral care that are also part of the portfolio. Maybe just touch on that as well. Yeah. The way to think about it, Kevin, is that 85% of the sales are mouthwash, and the remainder would be things like toothpaste or toothbrush or a gum or lozenges, those types of things. What we're really driving is the mouthwash. Now, the mouthwash itself is a premium price. You want to do some comparisons. The retail's at about $7.67 on average. For a comparably priced major brand, it would be $3.50-$4. It is clearly a premium mouthwash. Retailers really like the presence of a successful premium brand in the category. That's been proven out by the amount of distribution gains that the brand has gotten over the past three years. We're really optimistic that that 68% ACV is gonna grow rapidly in the next 18 months. Yeah, the only thing I would add to that, Kevin, is also our international growth, right? We think there's a lot of upside. As an example, when we bought the Waterpik business back in 2017, we've more than doubled that business in four years. Okay. One last one. Thanks, Rick. Just where do you think the ACV can go? I mean, I recall the company's done deals in the past where the ACV has been lower, so I guess the thinking perhaps there's been more of a distribution opportunity domestically, at least in scanned channels. Maybe just comment on that, where you're kind of catching this one in terms of the product development and where you think the ACV can go relative to your other personal care brands like Trojan and Orajel, et cetera. Yeah. I think the benchmark would be if you would just look at some of the major brands like Listerine, Crest, you know, they're between 90%-95% ACV. That would be. I don't think we'll ever get to that, but I do think we'll be getting into the 80s, Kevin, in the not too distant future. Okay. Very helpful. Thank you. Good luck. Our next question is from Rupesh Parikh with Oppenheimer. Your line is open. Good morning. Thanks for taking my question. I guess first, in terms of the 15% sales growth that you guys are expecting next year, if you could provide just what are some of the key drivers there. For this brand, like, are there any COVID impacts, positives or negatives that have impacted the brand? Yeah, we didn't really see a big COVID drop for this brand in 2020, so that's not a worry for us, Rupesh. What was your other question? Yeah. The 15% sales growth next year, just- Oh Give us some color for the drivers. Oh, well, I mean, the biggest one is gonna be distribution. The second would be larger sizes, which the brand doesn't have right now, and that would be incremental shelf space. Then, of course, international, which we already described, where we have a foothold in a lot of different markets, but it really hasn't been developed well. I would say those are the three things I would point to. Yeah. Just strong consumption overall, right? This is a problem solution brand. If you just look at consumption without even ACV increase, just really strong, same stores, same store growth. Yeah, you know, one of the things we plan to do next year is to dial up the advertising more than they had spent in the past to drive the top line. That's in the plans as well for 2022. Okay, great. Maybe just one follow-up question. What does the competition look like in the category, both in the U.S. and internationally right now? Yeah. Well, if you look at alcohol-free, you know, I said that TheraBreath is the number two brand at 14% share. The number one in the category is Crest at 34% for alcohol-free. Listerine would be 12%, and ACT would be 11%. So, that gives you an idea. You know, it is a fragmented category, but this brand has come on strong in the last three years. Okay, great. Thank you. Okay. Our next question is from Steve Powers with Deutsche Bank. Your line is open. Hey, guys. Steve. Good morning. Thanks. Hey, first, just back on international. Are there certain markets where you see more immediate prioritization relative to how you framed a relatively broad footprint today? Yeah. I think that because of the strength of our global markets group, I think that Asia would be probably number one from a region standpoint where we're gonna go. Okay. I guess just, you know, the brand as I look into it, you know, it has a long history. I think it was founded in 1994. Maybe just a. Yeah. A little bit more context around why the recent success, just what's driven it, what kind of drove an inflection more recently. Somewhat related, I guess, just your perspective on the importance of Dr. Katz, who founded the brand, whose name features pretty prominently on the packaging. Is his involvement in the brand important? If so, do you have a relationship there contracted as part of the deal? Yeah. No, we have a good relationship with Dr. Katz and certainly, you know, it was his efforts over the past 20 years that drove the brand. You know, he stuck with it for a long time and finally caught fire last three or four years. I do think that the breakthrough is probably because their packaging really pops. They've. You know, over time, just the accumulation of the marketing and the advertising has created a greater awareness with respect to the brand. We do have a relationship with Dr. Katz, you know, going forward. You know, we think we're well positioned to drive it in 2022. Okay. Very good. Thank you. Yep. Our next question is from Jason English with Goldman Sachs. Your line is open. Hey, good morning, folks, and happy. Hey, Jason. Yeah. Just a couple of quick questions. First on the guidance revision for the fourth quarter. Can you unpack it a bit? 'Cause I know in the press release you cite a number of factors. I'm sure interest expense is gonna be one. This is the synergies. But you seem to also be including in there some transaction expenses that I think most of us will look at as one-timers. Can you parse out the one-time expenses that we'll probably exclude versus the ones that are maybe ongoing? Yeah, I mean, we tried to give a good sense of there's three things that are gonna impact the $0.03 Drag in 2021. It's transition costs, like IT integration, like the severance as an example, partially. Transaction costs are like banker fees, for example, or legal fees. And then finally, there'll be incremental marketing spend as well. I would probably say about 1/3 of that is really around transaction costs, Jason. Got it. The other 2/3 is like the interest and the higher marketing? Some of the transition costs, yeah. Okay. At least more than half, it's one time it sounds like. Sorry, unrelated housekeeping item, but as I looked to include this in my model, it caused me to go back and scrub my cash flow statement, and I have earmarked in the fourth quarter this year a reasonably chunky earn-out related to Flawless that I think what I've earmarked is probably too high. Can you give us an update on the expected cash flow related to the earn-out in the fourth quarter? Yeah, I think we mentioned a little bit in the last release. We had made a final earn-out adjustment in the Q3 quarter-end release, and we expect there to be no further earn-out adjustments to be necessary and no cash flow impact. Got it. I need to zero that out is what it sounds like, correct? Correct. Awesome. Thank you. I'll pass it on. Okay. Our next question is from Olivia Tong with Raymond James. Your line is open. Great. Thank you. Wondering how the addition of TheraBreath allows maybe your ability to expand beyond you know sort of build an entire oral care regimen you know if it can help growth in other brands within the oral care portfolio. Also your ability to expand TheraBreath beyond the core that it has right now. You mentioned 85/15 in terms of the split. Do you think that 15% gets bigger over time or do you think it's more around the 85%? Thanks. Yeah. Initially, the efforts are all around the 85%. I think sometimes companies get in trouble when they fragment their efforts. The mouthwash part of the business is where we're gonna put all of our efforts. As far as the co-branding, yeah, that's always an opportunity, you know, for anybody that acquires a brand. We wouldn't tip our hand now with respect to where we think we might be able to use that brand in other categories. Got it. Thanks. In terms of the distribution expansion that you have in 2022, how much of that is already locked in, you know, relationships already there, before you entered? Or is it almost all things where you expect to, you know, utilize your relationships in order to get shelf space for the brand? Look, I'd say we have a great deal of confidence in hitting that 15% next year. Yeah, some of it may already be in place, some is not, but the indications on the part of the retailers are positive. Yeah, we feel good about 15%. Got it. Thank you. Okay. Our next question is from Kaumil Gajrawala with Credit Suisse. Your line is open. Good morning, guys. If I can follow up on some of your commentary on competition. Can you maybe talk a little bit about, we've obviously seen a bump on what was the growth rate very recently for TheraBreath. Has the competition seen a similar growth rate in the alcohol-free space, or is this unique to this brand? Well, I'd say the number one, Crest, it has done well in alcohol-free. But the other brands have not performed as well, at least in the most recent 52 weeks. So I'd say it's not entirely unique to TheraBreath. Now, I did mention that the category has grown on average for the last three years, 4.5%. TheraBreath has grown double digit in each of those three years. You know, I think one of the reasons why is that it is a different product in that it targets bad breath germs, and it has an ingredient that creates oxygenation in your mouth, which inhibits bacteria growth. It's, you know, it's kind of a different mechanism than other non-alcohol or even alcohol-related products on the market. I think the point of differentiation is really helping. I see. Interesting. Is that a proprietary formula or is there, you know, are those ingredients that are readily available that someone else can try to replicate? Yeah, no, it's there's no IP related to the product, so there's no patents, but there is know-how with respect to the manufacturing process. As far as the ingredient goes, there's nothing unique about it other than it's one of only two brands that use it in the entire category, whether it's alcohol-free or alcohol-based. Okay, got it. Just maybe final question on breaking down the growth a little bit more. You mentioned they're double digit with a significant increase in distribution. Can you maybe talk about how velocities have been trending during that period of distribution gains? Yeah, they've been doing well. I mean, it's when you get distribution gains in 2019 and the product turns, you get more distribution in 2020, more in 2021. It's been feeding on itself over the last few years. That's one of the reasons why we're confident we're gonna expand distribution next year. Okay, got it. Thank you. Success begets success. Thank you. Our next question is from Bill Chappell with Truist Securities. Your line is open. Yeah, thanks. Good morning. Hey, just a couple follow-ups here. Hey, Bill. Help me understand kind of the distribution today. I mean, 68% ACV seems fairly high for or I guess the $86 million in revenue seems fairly low for 68% ACV. Is it right now you only have kinda one or two SKUs, and you think you can double or triple that per store? With that in mind, I mean, I would imagine the company knows what the planogram resets look like for the spring, and that's kinda baked into your 15% outlook. Is that a fair statement? Well, you don't know everything for the spring, Bill. As far as ACV goes, we do expect greater facings as well, you know, going forward. So you might be including an ACV, maybe a couple of facings. But this is what the company likes to call a rainbow of color on shelf. To the extent we can get more facings, it's gonna increase the sales, even in places where we already have distribution. You're not sure if you'll get into the dollar, club or grocery more exposure in the spring? That's too early to tell. Now, you know, Bill, you're getting into the weeds here, I think. You know, we've obviously only the company has spoken to the retailers. We have not, you know. Business isn't gonna close until the end of the month. However, we are aware of the conversations that the brand has had with various retailers, and that's what gives us confidence for next year. I think it's also, over the long term, we expect to get this brand up to in the 80s for ACV, in line with the comment Matt made. Gotcha. No, I would think it's more TDPs, but we can talk that offline. Okay, I'll second. Can you just maybe talk a little bit about the revenue for next year? Do you plan to get out of the non-mouthwash products and just focus on mouthwash? Or will that? Is that still baked into next year's numbers? No, that's still baked in, Bill, so we're not abandoning those. We do think that the big opportunity is on the mouthwash side. That's why we had made my earlier comment. Sure. Finally, just a little background on kind of and you might have said this before on the transaction. I mean, how long you've known them? Was this an auction? You know, I imagine that this type of growth in this category there are a lot of interested parties. Yeah. No, it was an auction process, and it began, you know, I would say over the summer. It concluded in the wee hours of the morning on Thanksgiving Day. Got it. Well, that's all I got. Well, thanks so much. Okay, Bill. Our last question is from Chris Carey with Wells Fargo Securities. Your line is open. Hey, thanks. Good morning. Can you just confirm whether or not this is going to be included in the incentive compensation for gross margins for next year? Yeah, Chris. I mean, what we'll do is we'll set a plan, like we always do, and that plan would include sales, gross profit, gross margin, cash. Whatever we get from this acquisition, we roll into 2022, when we give our full year outlook and provide our full year plan, in February. Okay. Got it. Thanks. Just, you know, the growth outlook, clearly the brand is seeing inflation as well. It's got, you know, very good margins and synergies. Are you gonna need to take a level of pricing that you're seeing in the rest of the portfolio, or is it too early to say? Yeah. It's too early, Chris, to address that question. Okay. Then one final one. Just, there's a bit of, you know, certainly a pharmacy, you know, kind of dental angle, it would appear anyway. You know, is professional channel a place where this brand exists today? Is that an opportunity? You know, you mentioned that, you know, it's got good ACV, 68%, it's clearly not irrelevant, but the distribution of the TheraBreath organization is gonna be additive. Anyway, the question is really about, you know, yes, retail, but is professional channel an opportunity or is it already there today? Thanks for that. Yeah, no, potentially. Remember, we have the Waterpik brand, so we call on all the high volume dental offices in the United States. That is a potential avenue for us. That's not something that's foundational to our plans for 2022 or 2023. Okay. All right. Thanks so much. All right. Thank you. That concludes the Q&A session. I would now like to turn it back to Mr. Matt Farrell. All right. Hey, everybody. Thanks for joining us today. It's a big day for us, so acquiring our fourteenth power brand. We'll talk to everybody when we have our fourth quarter results at the end of January. Thanks for joining us today. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.