Company: CHD
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000950170-25-019801
Chunk: 170

Company: CHURCH & DWIGHT CO INC /DE/
Filing Date: 2025-02-13
Form: 10-K
Item: Item 7
Chunk 170
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" or "excess earnings" discounted cash flow method, which contains numerous variables that are subject to change as business conditions change, and therefore could impact fair values in the future.  Judgment is required in assessing whether assets may have become impaired between annual valuations.  Indicators such as unexpected adverse economic factors, unanticipated technological change, distribution losses, or competitive activities and acts by governments and courts may indicate that an asset has become impaired.  

The result of our annual goodwill impairment test determined that the estimated fair value substantially exceeded the carrying values of all reporting units.  We determined that the fair value of all indefinite-lived intangible assets for each of the years in the three-year period ended December 31, 2024, exceeded their respective carrying values based upon the forecasted cash flows and profitability, with the exception of our VMS business described below. 

During the third quarter of 2024, we continued to experience a decline in market share and a deterioration in the financial performance of our VMS business, which includes the VITAFUSION and L'IL CRITTERS trade name, primarily due to significant product competition coming from new category entrants, including private label.  The continued decline in profitability caused management to reassess its 

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CHURCH & DWIGHT CO., INC AND SUBSIDIARIES(Dollars in millions, except share and per share data) 

long-term strategy and financial outlook of the business.  The revised financial outlook reflects lower estimates of future sales growth and cash flows which resulted in a triggering event in the third quarter.  The triggering event required the Company to review the carrying value of assets supporting the business.  The assets supporting the VMS business include the VITAFUSION and L'IL CRITTERS indefinite-lived trade name, a definite-lived customer relationship intangible asset and PP&E specific to our VMS business.

We used an excess earnings discounted cash flow model to determine the fair value of the trade name.  The assumptions used in the model require significant judgement in determining the expected future cash flows.  The key assumptions utilized in our impairment analysis included, but were not limited to, net sales growth rates between -15.2% and 2.1%, EBITA margins in the low single digits, and a discount rate of 8.25%.  Estimates are based on market conditions and management’s current expectation of the success of growth and profitability initiatives.  The valuation resulted in a full impairment of the $281.3 trade name and