Company: CHD
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000950170-25-019801
Chunk: 213

Company: CHURCH & DWIGHT CO INC /DE/
Filing Date: 2025-02-13
Form: 10-K
Item: Item 8
Chunk 213
---
 was estimated based on a “relief from royalty” 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.  The key assumptions used in determining fair value are sales growth, profitability margins, tax rates, discount rates and royalty rates. The Company determined that the fair value of all indefinite-lived trade names 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 the Vitamins, Minerals and Supplements ("VMS") business described below. During the third quarter of 2024, the Company continued to experience a decline in market share and a deterioration in the financial performance of its 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 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 the VMS business.The Company 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 the Company's impairment analysis included, but were not limited, 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.  The remaining carry value of the trade name at December 31, 2024 is $0.0. The Company also evaluated its ability to recover the carrying value of long-lived assets supporting the VMS business by comparing the carrying amount of those assets to the future undiscounted cash flows over the estimated life of the identified primary asset.