チャーチ＆ドワイト（CHD）2026年第3四半期決算説明会：オーガニック成長率の見通しを上方修正

主要ポイント

• チャーチ・アンド・ドワイツ（NYSE: CHD）が発表した2026年第3四半期の純売上高伸び率は1%、オーガニック売上高成長率は5.1%となり、4.6%の数量増加および0.5%のプラスの価格・製品ミックスが寄与しました。
• 調整後EPSは前年同期比13.6%増の0.92ドルとなりました。調整後営業利益は10.1%増の2億9,800万ドルとなりました。
• 粗利益率は、生産性向上とポートフォリオ施策がインフレおよび輸送コストを十分に相殺し、170ベーシスポイント拡大して46.8%となりました。
• オーガニック成長は広範に及び、国内消費者向け部門が4.4%増、海外消費者向け部門が7.8%増、特品部門が5%増となりました。
• 経営陣は通期のオーガニック売上高成長率見通しを約5%に上方修正し、調整後EPS成長率を約7%と予想しています。
• チャーチ・アンド・ドワイツは、従来の枠組みを更新し、有効期限のない最大10億ドルの新たな自社株買いプログラムを承認しました。

主要財務データ

粗利益率には、生産性向上から150ベーシスポイント、買収ミックスおよびポートフォリオ施策から160ベーシスポイント、数量・価格/ミックス・為替から40ベーシスポイントのプラス効果がありました。一方、インフレおよび輸送コストは180ベーシスポイントの押し下げ要因となりました。

事業および業績動向

米国消費者向けオーガニック売上高は、「ARM & HAMMER」の液体洗濯洗剤および猫砂、「THERABREATH」のマウスウォッシュおよび歯磨き粉、「Waterpik」のウォーターフロッサーが牽引し、4.4%増加しました。経営陣によると、当四半期は6つのブランドが大きく貢献しました。

「ARM & HAMMER」の洗濯洗剤の消費量は4%超増加し、カテゴリー全体成長率の約2%を上回りました。同ブランドは販促活動が活発化するなかでもシェアを拡大しました。「ARM & HAMMER」の猫砂の消費量は5.4%増加し、シェアは0.6ポイント上昇して24%となりました。

「THERABREATH」はマウスウォッシュ市場でシェアを3.5ポイント獲得し、過去最高の26.8%に達しました。経営陣は、マウスウォッシュカテゴリー全体の世帯普及率が65%であるのに対し、同ブランドは14%にとどまっていることから、更なる成長の潜在性があると強調しました。「THERABREATH」の歯磨き粉は約1ポイントのシェアを獲得し、リピート率は30%に迫っています。

「HERO」の消費成長はアクネパッチカテゴリーを上回りました。経営陣によると、洗顔料の投入に後押しされ、直近4週間ではアクネケア全体でもシェアを拡大しました。「Waterpik」は2桁の売上成長を記録し、2026年にシェアを拡大しました。

「TOUCHLAND」の米国における成長は、同ブランドが販路を持たないチャネルで競合製品が拡大したため、当初の想定を下回りました。経営陣は2026年通期ではほぼ横ばいを見込んでいるものの、米国での確実な販路拡大と海外展開に基づき、2027年には成長を見込んでいます。英国およびオーストラリアでの初期投入は好調であると説明されました。

海外消費者向けオーガニック売上高は、「THERABREATH」、「BATISTE」、「TOUCHLAND」、「OXICLEAN」が牽引し、7.8%増加しました。海外の9ブランドが2桁成長を記録しました。グローバルEC売上高は20%増加し、オンライン売上は消費者向け全体売上の25.9%を占めました。

特品部門は11四半期連続でオーガニック成長を記録し、第3四半期のオーガニック売上高は5%増加しました。

業績見通し（ガイダンス）

チャーチ・アンド・ドワイツは、通期のオーガニック売上高成長率予想を従来の4%〜5%のレンジの上限にあたる約5%に引き上げました。また、経営陣は以下の見通しも示しています：

• 調整後粗利益率は約100ベーシスポイント拡大。
• 調整後EPS成長率は従来の6%〜8%の範囲を絞り込み、約7%増。
• マーケティング投資は売上高比で約11%。
• 調整後税率は約21%。
• 営業キャッシュフローは約11億7,500万ドル。
• 設備投資額は約1億2,500万ドル（売上高比約2%）。

2026年第4四半期について、経営陣はオーガニック売上高成長率を約4%、調整後EPS成長率を前年同期比17%〜19%と予想しています。同社は10月のトレンドも引き続き堅調であったとしつつも、第4四半期の売上想定はやや保守的かもしれないと認めました。

この見通しには約1億5,000万ドルのインフレ影響が織り込まれており、これは当初の2026年想定を5,000万ドル、7月時点の見通しを2,000万ドル上回っています。また、WTI原油価格を1バレル＝約100ドルと仮定しています。

リスクおよび注視すべき点

インフレと輸送コストが引き続き短期的な主な圧迫要因です。経営陣は中東紛争、商品価格の上昇、世界的な輸送運賃の上昇、米国のドライバー不足を挙げました。また、輸送のスポット運賃が急増しており、当面は構造的に高止まりする可能性があると指摘しました。

消費者はインフレとガソリン価格の上昇による圧迫を受け続けています。洗剤や猫砂のカテゴリーにおける販促活動は過去の水準を上回っていますが、経営陣は販促に対する需要弾力性は引き続き高いと述べています。

同社は値上げを検討する前に、生産性の向上とレベニュー・マネジメント（収益管理）を優先する方針です。インフレが一時的ではなく構造的であることが判明した場合には値上げが必要になる可能性があるとしつつも、2027年の具体策については言及しませんでした。

「TOUCHLAND」は米国での成長減速を受け、引き続き執行上の焦点となっており、2027年の見通しは小売展開の拡大、マーチャンダイジングの成功、海外での更なる流通拡大にかかっています。

アナリスト質疑応答のハイライト

• 2027年の利益率見通し：経営陣は、生産性向上、好調なポートフォリオ・ミックス、固定費レバレッジが利益率を支えると見込んでいます。2027年も過去最高の生産性を達成すると予想していますが、正式な利益率目標は示しませんでした。
• カテゴリー成長率：経営陣は2026年のカテゴリー成長率の見通しを約2.5%に引き上げ、2027年も同程度の伸びを見込んでいます。
• コモディティのヘッジ：チャーチ&ドワイツの2027年に向けたヘッジ比率は、前年同期よりもわずかに高くなっています。ただし、経営陣はインフレが広範に及ぶ一方でヘッジは一部の原材料にとどまるため注意が必要であるとしています。
• THERABREATHの成長持続性：経営陣は、米国での2桁成長、高いリピート率、低い世帯普及率、そして海外展開を2027〜2029年にかけた持続的成長の原動力として挙げました。
• TOUCHLANDの流通展開：同社は、ビューティーチャネルや量販店チャネルを含む米国の小売市場での取り扱い拡大が確定したことを確認しました。また海外展開も進んでおり、2027年と2028年に更なる流通拡大を計画しています。
• 資本配分およびM&A：10億ドルの自社株買い枠は、主に柔軟性を維持するための枠組み更新と位置付けられています。海外での買収基準については、主要ブランドであること、粗利益率の向上、戦略的適合性に引き続き焦点を当てていますが、海外案件ではより高い運用上の複雑さを受け入れる可能性があるとしました。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, ladies and gentlemen, and welcome to the Church & Dwight Third Quarter 2026 Earnings 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, the company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings. I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dog. Please go ahead, sir.

Richard Dierker

Good morning, everyone. Thanks for joining the call.

We delivered strong third quarter results, and I want to start off by thanking all of our Church & Dwight employees around the world for executing so well in a volatile environment. I'll begin with some thoughts on the broader environment and then review our Q3 results, and then I'll turn it over to Lee McChesney, our CFO. And when Lee is done, we'll open it up for questions.

Starting with the broader environment, conditions remain challenging, including inflationary pressure related to the Middle East conflict and increasing global transportation rates. That said, our teams continue to execute with excellence. Our portfolio of value and premium brands. They are performing well, and we remain focused on offering consumers high-quality, solution-oriented products at the right value. Our power brands drove our third consecutive quarter of industry-leading organic sales growth supported by innovation, distribution wins and targeted marketing investments.

Turning to the quarter. We exceeded our outlook across key metrics. Net sales increased 1% ahead of our outlook of a 1% decline. Organic sales grew 5.1%, well above our 3% outlook with growth across all 3 divisions. This performance was driven primarily by volume growth of 4.6% and positive price and mix of 0.5%. Gross margin was up 46.8%, up 170 basis points and adjusted EPS was $0.92, up almost 14% and above our $0.89 outlook. Innovation and distribution gains continue to be key drivers of our organic growth performance. Our '26 innovations across the power brands are performing very well, and we remain confident that our relentless focus on innovation will continue to drive industry-leading growth on shelf and fuel market share expansion.

Now I'll turn my comments to each of the 3 divisions. First up is the U.S. consumer business. Domestic organic sales increased 4.4%, driven by 3.6% volume growth and favorable price and product mix of 0.8%. Growth was broad-based across our Household and Personal Care portfolios, led by ARM & HAMMER liquid laundry detergent, THERABREATH mouthwash and toothpaste, ARM & HAMMER cat litter and Waterpik water flossers. [indiscernible] mouth is also off to a great start. This quarter, we had such broad-based growth. I didn't list them all, but 6 brands contributed in a meaningful way.

The ARM & HAMMER brand, which had another quarter of growth, with Laundry heading record shares across total laundry, ARM & HAMMER laundry detergent consumption grew over 4%, and the category grew about 2% in the quarter. Promotional levels for the category were elevated. However, ARM & HAMMER gained share as the value segment in laundry continues to be fit for purpose in this economic environment.

Next up is litter. Continued fantastic results as ARM & HAMMER cat litter consumption grew 5.4% and share increased 0.6 points to reach 24%. While category promotional levels declined slightly, they do remain at historical high levels. Our ARM & HAMMER cat litter dual defense with Microban clumping litter launch continues to do very well.

Now turning to the personal care side of the business. THERABREATH continues to contribute considerably to our overall performance as the brand gained 3.5 share points to reach a record share level of 26.8%, which further solidified our #2 position in total mouthwash. Even with that growth, household penetration remains relatively low at only 14% compared to the mouthwash category of 65%. THERABREATH Complete is now the top-selling new rents nationally and we recently launched portable rents sachets for freshness on the go. THERABREATH toothpaste is building trial and an everyday regimen through a robust marketing campaign with strong average consumer ratings of 4.5 stars.

HERO is expanding its acne expertise in the cleansers with a lineup designed to balance efficacy and gentleness. HERO consumption outpaced the patch category in the quarter, and we're confident that the cleansers launch will lead to share gains in total acne. In fact, in the last 4 weeks, that is happening. Facial cleansers represent a $650 million category and account for approximately 30% of the total active category. Lots of runway for HERO as again, we have relatively low household penetration at 10% compared to the category at 30%, which gives us great confidence in the continued growth of the brand.

Turning to Waterpik. That business had double-digit sales growth in the quarter and is gaining share in 2026. As we discussed on the last quarter, touch land sales growth in the U.S. has slowed from our original expectations due to competitive products growing in channels that we did not compete in. The good news is that our plans to expand distribution in the U.S. are on track. And as a reminder, a significant opportunity remains on household penetration in the U.S., where TOUCHLAND is only 6% compared to the category, which is around 47%.

Additionally, the international rollout for TOUCHLAND remains significant. We recently launched TOUCHLAND in the U.K. and Australia, and the early results have been excellent. We have plans for a much broader distribution in '27 and '28.

Turning to international. Organic sales delivered another strong quarter of growth and grew organically 7.8% and driven by volume growth of 9.1%, partially offset by lower price and product mix of 1.3%. Again, similar to the U.S., growth was broad-based, was led by THERABREATH, BATISTE, TOUCHLAND and OXICLEAN. In fact, 9 brands in International had double-digit growth. Global e-comm was once again a strong contributor. Revenues grew 20% in the quarter and global online sales now represent 25.9% of total consumer sales. Our SPD division also delivered strong results, organic sales growth of 5%, reflecting volume growth of 2.9% and higher price and product mix of [ 2.1 ]. These balanced global results contributed to our overall great organic growth performance in the quarter.

This is now our 11th straight quarter of organic growth in the SPD business. Regarding 2026, I continue to be very pleased with our performance in the first 9 months of the year. Our brands remain strong. Our portfolio is more focused following the strategic actions we completed in 2025, our operating fundamentals continue to support volume growth, market share gains and gross margin expansion.

Looking ahead to 2027, I'm also very optimistic about the company's performance. We have momentum as we enter the year. Our teams are advancing our 2030 growth initiatives focusing on expanding ARM & HAMMER, increasing THERABREATH and oral care and scaling our international business. I look forward to sharing our first formal update on these initiatives at our Analyst Day at the end of January. And with that, I'll turn the call over to Lee for more detail on the quarter.

Lee McChesney

All right. Well, thank you, Rick, and good day, everyone. We appreciate you joining the call. As Rick just shared, our teams delivered another strong quarter in 2026. Against the backdrop of ongoing industry headwinds and uncertainty, our team has delivered 3 quarters of 5% plus profitable organic growth. A big thank you to our team members and all of our retail and distributor partners for driving growth, really well done.

So let's get into the details. We'll start with EPS. Third quarter adjusted EPS was $0.92, an increase of 13.6% versus last year, and it was above our outlook of $0.89, stronger-than-expected sales and continued gross margin expansion fueled the earnings growth, enabled healthy levels of marketing and supported our SG&A investments. Organic sales in the third quarter grew 5.1%, well above our outlook of approximately 3%. Growth was broad-based and primarily volume driven, with volume growth of 4.6% and positive price and mix of 0.5%. Our Consumer Domestic business organic sales increased 4.4%. Our Consumer International business increased 7.8%, and our Specialty Products business increased 5%. This steady and broad-based growth continues to demonstrate the strength of our portfolio of categories or innovation that drives true incremental growth and the execution mindset of our commercial teams.

Let's now turn to gross margin. Our third quarter gross margin increased to 46.8%, an increase of 170 basis points versus last year. Productivity delivered 150 basis points, our acquisition mix and portfolio actions drove 160 basis points and 40 basis points was a combination of volume, price/mix and FX. These positive contributions were partially offset by the headwinds from inflation and transportation costs of 180 basis points. In this quarter, our marketing investment levels reached 11.9% of sales as we continue to invest behind our brands and new products.

Adjusted SG&A was $261 million or 16.3% of net sales, an increase of 110 basis points versus last year. The increase reflects acquisition-related amortization in our SG&A investments in international, e-commerce and AI capability building. Adjusted income from operations increased $27 million or 10.1% to $298 million, reflecting our strong profitable growth results.

Let's now turn to cash flow. Cash from operations for the first 9 months of 2026 was $841 million, which drove a healthy cash flow conversion of 114%. Capital expenditures totaled $92 million through the third quarter, and we expect full year capital expenditures to be approximately $125 million or about 2% of sales. And as for the third quarter -- as of the third quarter, total debt was $2.2 billion and cash on hand was $447 million. Our Board of Directors approved a new share repurchase program authorizing up to $1 billion of common stock repurchases. This program has no expiration date and replaces the prior authorization. This program is consistent with our disciplined approach to capital allocation. It gives us additional flexibility to return capital by continuing to invest in the business and pursue strategic acquisition opportunities.

Let's now turn to our 2026 outlook. As detailed this morning in our press release, we are raising our sales expectations and tightening our adjusted EPS outlook. Our outlook reflects the strong year-to-date growth and our confidence in continued fourth quarter momentum. It also includes the latest impact of the Middle East commodity pressures in the latest transportation rates that have both increased further over the past 90 days. Overall, our outlook for 2026 includes approximately $150 million of inflation, which brings us up to $50 million more than we had in our original outlook at the beginning of 2026 and $20 million more than our July outlook. And this outlook assumes roughly a crude oil price of $100 a barrel.

Now our teams have continued to focus on delivering incremental productivity and leveraging an RGM toolkit to mitigate this pressure, which has helped us -- helped our business deliver gross margin improvements every quarter in 2026. So for '26, we now expect organic sales growth of approximately 5% at the high end of our prior range of 4% to 5%. We now expect adjusted gross margin to expand approximately 100 basis points, inclusive of the latest cost headwinds. And our market investments remain at approximately 11% of sales, reflecting our continued commitment to brand investment. SG&A as a percentage of sales is expected to remain above 2025 levels including acquisitions, our target investments and growth initiatives, AI capabilities, e-commerce and our international business.

The adjusted tax rate is expected to be approximately 21%, and we now expect adjusted EPS of approximately 7% tightening on our prior range of 6% to 8%. Our cash from operations outlook remains approximately $1.175 billion. If we turn to the fourth quarter, we expect organic sales growth of approximately 4% and adjusted EPS is expected to increase 17% to 19% versus last year.

To close out our remarks, let me reiterate, we are very pleased with our third quarter performance and remain confident in our ability to deliver an improved 2026 outlook. Our strong portfolio, continued share gains and disciplined execution position us well as we look forward to 2027. Matt, we are now ready for questions.

Operator

[Operator Instructions]

Your first question comes from the line of Anna Lizzul with Bank of America.

質疑応答

Anna Lizzul

Rick, your portfolio is clearly performing really well with innovation across categories, which has elevated your mix and made it a bit more premium over time. So I was wondering if you could talk about innovation on the value tier, especially in light of some higher promotional activity you mentioned from peers.

And then on the cost side, I wanted to ask how we should start thinking about gross margin expansion into early 2027, just given the heightened inflationary environment and the pressure that you might be seeing there?

Richard Dierker

Yes. Thanks, Anna. So I think innovation has become a core competency of Church & Dwight. We just had Carlos Linares, who was our -- of R&D for many years, retired. And what he brought to this company, I think, was just a great multifactor way to innovate. And so we have built this muscle. And it's not a muscle that we've built just in personal care, it's in household as well. And we've gone through the ARM & HAMMER strategy and part of that is a good, better, best strategy for laundry and for litter. And there's a lot of work going on with household innovation, you'll see some stuff coming in 2027. But in fact, I just sat through 2028, probably 2 weeks ago, when I was really encouraged about the entire innovation portfolio but especially household for 2028. So I think it's broad-based. We always want to compete on innovation. Value is not just price. It's what the consumer is getting when you intersect value and price. So that's how you win with innovation over a long period of time. And then, Lee, you want to take the forward-looking.

Lee McChesney

Yes. So I mean, to your point, we certainly know what commodities are today. That's certainly what everyone's faced in the business. And we have some good confidence as we look forward here. If we look at productivity levels of where we are today, we're going to have a record level of productivity in 2026. And as we sit here today, we're actually -- at the same time last year were actually a little bit favorable to that. So that's a good start for next year. We have our RGM toolkit has served as well this year. And teams have rallied around that for '27 as well.

And then certainly, we have a nice positive drive towards good mix from innovation and from the portfolio. So all those things are in play and again, it's all against the backdrop of the inflation we see today. So as we said, we're optimistic for '27 and we'll continue to respond to the macro environment.

Richard Dierker

Yes, I would maybe add 1 or 2 comments to that. I think the other thing that's kind of not unique but kind of normal is we actually get fixed cost leverage next year, right? This year, our reported sales growth was essentially flat to up 1%. Organically, we're doing great. But remember, we shed $400 million of businesses. Next year, our organic and reported numbers will be a lot closer, and that provides some leverage. And as Lee said, we had a record year of productivity. Looking at what we know right now, we expect another record year next year for productivity. So those are great tailwinds.

Operator

Your next question comes from the line of Peter Grom with UBS.

Peter Grom

Happy Friday. Your 2 top line-related questions, Rick. First, maybe just to start, would love to get some perspective on what you're seeing from a category standpoint. Obviously, there's a lot of moving pieces across different categories but curious if you've seen any major shifts as we move through the quarter. And I know a lot can change between now and January, but just any thoughts on how you see category growth progressing over the next, call it, 12 to 18 months? And then I guess just related to that, the 4Q organic sales guidance, a bit of a step down versus what we've seen year-to-date despite an easier comparison understanding, you have a track record of over-delivering. But Curious if that's just simply conservatism given the external environment? Or is there something else driving that view?

Richard Dierker

Yes. Thanks, Peter. I think first of all, categories I'm actually a little bit more bullish on these days. I think we started the year saying category growth of around 2%. Q1, Q2 and Q3 now have all kind of been at or above 2.5%. Like we had a strong Q1 of around 3.5%. Q2 was 2.7%, and then Q3 was 2.5%. So outlook for categories is closer to 2.5%. And also, I would say, as we look forward, in 2027, we think it's around 2.5%. So that's all a good thing. On Q4 organic sales look, 4% is still super high compared to the rest of the industry. Maybe we're being a little conservative. I would say our trends are very strong as we look at October even.

Operator

Your next question comes from the line of Bonnie Herzog with Goldman Sachs.

Bonnie Herzog

Okay. I had just a quick follow-up on gross margins and then another question. But first, how hedged are you on commodities heading into next year? Are you guys below your typical levels? And then I did have a question on your pricing and promotions. As we think about the consumer, consumption remains pressured and stretched consumer wallet. So could you talk about how you're thinking about pricing for the rest of this year and into next year? Also with gas prices still elevated, what are you seeing in terms of promotional intensity in your categories? Are there certain categories that are still more impacted than others?

Richard Dierker

Yes. Why don't I take the pricing and promotion question, and then Lee can circle back on gross margin and hedging. So look, the consumer is still stretched. A lot of inflation happening out there. You're right, gas prices are up, disposable income, that means disposable income is down. when you have this amount of inflation, typically promotional levels kind of retread a bit. That hasn't happened largely, I think, because manufacturers have spent back kind of tariff refunds to help extend promotional spending.

As I said, kind of in my prepared remarks, in laundry, as an example, a mountain deal for the category went from the mid-30s typically to around 40. We also did that. We're gaining share in this environment. The value part of the segment is growing, but promotional spending is up versus historical levels for laundry and litter. But elastaticities are still strong. So when that happens, you do see the volumes kind of come in and react. I guess my comments on pricing and inflation in general is we've been very clear.

We are, first and foremost, going after productivity. And you just heard me say we had record productivity this year. We think we're going to have record productivity next year. That's what we do first and foremost. We then do at least said. We look at our revenue growth management and promotional spending and when inflation is elevated, typically promotional levels do come down. That's what we've seen. That's what I've seen over the last 20 years. And then the last is price. And I'll say, if inflation maintains at this type of level, historically, the perspective is companies have to move.

If it's not transitory, if it's structural, then it starts to make its way throughout the entire kind of cost picture. But we hit #1 and #2, the hardest. And then if we need to, then we look at number three. Lee, do you want to talk about hedging and gross margin?

Lee McChesney

Sure. So as Rick and I talked about, I got lots of things that help drive gross margin improvement. We've always done a healthy amount of hedging in key areas. We talked about earlier this year as some of the inflation came along. And then with all the volatility, we paused a bit, but we've been back at it and hedging going in into '27. I would say at this point right now, we're actually slightly hedged a bit more than we were at this time last year. But you have to consider that we hedge certain key things that we purchase. Right now, you're just seeing inflation everywhere. So the impact is helpful, but certainly, just the overall inflation bucket is larger as we look forward here. But that's all part of the math we talked about earlier that we're looking at and facing into for '27 with all of our tools.

Operator

Your next question comes from the line of Rupesh Parikh with Oppenheimer.

Rupesh Parikh

So on the HERO business, I was just curious how that continues to perform in international markets.

Richard Dierker

Yes. Sure. Rupesh, International, it's actually a great growth driver. We should have listed it in the release for international, maybe that was just an oversight. But it's definitely a net sales driver, consumption is up, sales are up. In the U.S., gained share in patches. Last 4 weeks, we gained share in all of acne. Cleansers are off to a good start, 4.85 stars consumer reviews. Sales were slightly down in the U.S., but that was -- consumption was up, but sales were only slightly down because remember, 1/3 of that business is online, and some of that shifted as Prime Day had shifted from July to June. So we feel great about here. We feel great about the innovation coming for HERO. So a lot of positive things.

Rupesh Parikh

Okay. Great. And then I guess my follow-up question, just on TOUCHLAND. Your team has cited slowing growth for that business. Where are the updated growth expectations for this year? And I guess we'll probably opt to wait for next year. But just curious as you think about international, just I don't know if there's a way to think about the level of growth going forward when you incorporate some of the international opportunity?

Richard Dierker

Yes. On TOUCHLAND, I would say the business is going to be close to flattish all in. But with the confirmed distribution gains that we've already heard about in the U.S. and with the international launch plans, which are underway now, we expect growth in 2027. So that's the good news.

Operator

Your next question comes from the line of Chris Carey with Wells Fargo.

Christopher Carey

One clarification question first. What was the tariff refund benefit in Q3? Did it come through? Is there any remaining impact in Q4? Maybe it's within that net inflation number, but I just wanted to confirm that. And then I have a follow-up.

Richard Dierker

Yes. Sure. So Chris, it was a net about $15 million in the third quarter. And in the fourth quarter, we expected to be about $5 million.

Christopher Carey

Great. And that lives in that inflation figure that you gave in the quarter?

Richard Dierker

Yes. It does, yep.

Christopher Carey

Yes. Okay. The bigger question with your -- one of your key strategies is to expand the oral care business. I get the question a lot. How long can THERABREATH sustained growth. I realize you gave some tidbits about household penetration, but maybe you could just expand a bit as we head into next year.

Secondly, on the toothpaste side of the business, the growth has been very strong. You obviously got, I think, the distribution you thought you would get -- you did get -- as of last call, you were still in that assessing whether it was the distribution and you were still assessing kind of repeat demand. Can you give us a sense of these 2 items really on -- within the concept of the Oral Care business and how durable you think above-average growth can be going into 2027 given your multiyear plan that you laid out at the prior Investor Day.

Richard Dierker

Yes. I'll give you some color. We're going to go through a lot more detail in January on the growth initiatives. But basically, on their THERABREATH mouthwash, we think there's still a ton of room to run. We're within 6 or 7 share points of LISTERINE these days. We're growing double digits. The category is flat. We're winning with innovation. We're winning with on the shelf space. We're winning with the marketing and reaching the consumer. Our repeat rate is fantastic. Customer loyalty is growing. So across the board, we believe that THERABREATH mouth flash has still a long runway. And the 1 fact that I continue to hit again and again is just household penetration for THERABREATH versus the category. And I think that's a good approximation. Meanwhile, that's just talking about the U.S., THERABREATH is a fantastic brand globally. It is starting to win globally. We just introduced that actually, in Japan, remember, we bought Graphical, our distributor a few years back and now we're putting a few of our brands through the distributor like Waterpik, like HERO, like THERABREATH. I think THERABREATH has already reached like 15% or 20% of their sales in a matter of 12 months or less.

Like so that trend, that need, problem solution brand for mouthwash is not just a U.S. trend or need. That is a global consumer need. So a lot of optimism about the global expansion of THERABREATH. Meanwhile, THERABREATH pace, like I said last call, off to a great start. We have a 1 share already on the paste, repeat rate is closing in on 30%, which is actually really good for a toothpaste innovation because there's high brand loyalty for toothpaste typically. So we got trial, and now we're getting repeat rate up, and we're laser-focused on that. Meanwhile, I think I'll hold any other further comments to January on how each of the initiatives are going. But I would just say I expect those growth initiatives to be tailwinds in '27, '28 and '29.

Operator

Your next question comes from the line of Nik Modi with RBC Capital Markets.

Nik Modi

Rick, can you just -- I wanted to follow up on that operating leverage question. You said you'll start seeing it next year because you're going to be lapping the loss of the revenue. But I suppose you're also spending a lot of money to try to fix those businesses before you sold them. So if you can maybe give us some context on if that will be a meaningful contributor for next year, at least over the next 6 to 12 months? And then if you could just provide any more distribution clarity on TOUCHLAND? Like are you going mass broad? Is it going to be more targeted? Any context would be helpful.

Richard Dierker

Yes. Okay, Nik. My comment on the question before, I think from Bonnie was really like, help us understand why we think we have some positive tailwinds on gross margin. We have multiple positive tailwinds on gross margin, one of which is just being able to leverage our fixed costs. And I think 2026 versus 2025, you're right. We had some higher spending that was happening. A lot of that higher spending was actually happening in the marketing line and the gross to net line, not necessarily on the cost of goods line. So that payable is already good and done with. And then as we move forward, we're going to have real revenue growth, and you should expect some leverage, and that's a tailwind. That's really the only point, not really trying to quantify that. It's just a normal tailwind for any business. We have real growth.

The second question on TOUCHLAND. I would say it's a little bit broader based than where we're at now. It's going to be in a couple of different classes of trade, which is good. It's one big step in the right direction, and we already have confirmed acceptances for that. And meanwhile, in the beauty class of trade, we're working hard on making sure we have innovations and exclusives in order to differentiate that a bit. So I would say I'm really, really happy with the progress we've made, and I'm optimistic.

Nik Modi

Great. Just one quick follow-up on that. Is the spacing going to be with beauty and mass or -- because I know that was a big debate point, like I'm just curious where you all sell out on that in terms of where it actually is being placed at retail.

Richard Dierker

Yes, that's where we expect it to be.

Operator

Your next question comes from the line of Andrea Teixeira with JPMorgan.

Andrea Teixeira

I was just hoping if you -- we can elaborate a little bit more on the pricing. You mentioned, obviously, there could be like the pressures, obviously for 2027 will be higher. I was wondering if you can comment on how to position now into next year. You have had tremendous success with your productivity program you just alluded to. The pressures being higher for you being able -- kind of like I want to summarize it is, please correct me if I'm wrong, that you're still looking for margin accretion, I don't think you took that back from your evergreen model into next year. So just to think as we put in pricing into next year, how we should be thinking? If not, it will be only with innovation? Just if you can help us think about your negotiations at this point.

Richard Dierker

Yes. Thanks for the question, Andrea. I'm not going to make any more comments on pricing than what I've already made. And just to reemphasize, I said, first and foremost, we focus on productivity. And we've done that in such a good way this year, hitting record levels. We expect to have record levels for next year. And we can see around the corner at that already. Number two, we expect promotions to come down over time as inflation is sustained at these levels. And then number three, I just said that if inflation remains at these levels. Typically, the industry is priced in those examples when it becomes more structural, not transitory. That's the extent to which I'll talk about about pricing. Our evergreen model is to have gross margin expansion. Revenue growth and margin expansion are the 2 things that are the lifeblood of any organization. And you have to have all the right things in order to do that though, you have to have a productivity program.

You have to have the right innovation, you have to have consumer moving innovation that people want to pay for. So we have some great tailwinds and our goal each and every year is to expand margin.

Operator

Your next question comes from the line of Olivia Tong with Raymond James.

Olivia Tong Cheang

I wanted to talk about the top line given the upside this quarter and, quite frankly, all through the year. You mentioned, obviously, the category is doing a little bit better. Obviously, you've gained some share. Can you talk about which elements of these you think are most repeatable? Where you think there is still more work to do to sort of maintain momentum across the key categories. Obviously, TOUCHLAND was a bit of a a tough 1 this year. You talked about some of the gains next year, but just thinking through the drivers of the top line next year?

And then my follow-up is just around International. If you could talk about sort of the next 12 months, your thoughts around international expansion from where you are right now. I noticed that price/mix obviously was swinging the other way. this quarter. If you could talk about that, whether there was more investment in price/mix or if there was something else that was driving that?

Richard Dierker

Yes. problem, Olivia. I would say I'm really encouraged with the top line. Number one, it matters what categories you're at. In our categories, I would pick our categories over almost any other company out there. The balance of premium value the lack of private label exposure in general, there are a lot of good things to say and why our categories are growing around 2.5%, fantastic. Then we tend to take share over time. Like I said before, our innovation muscle is alive and well. Our marketing and commercial teams are doing a great job gaining that -- those TDPs. We were the the second highest GDP growth, I let everyone know that last quarter as an example, for 2026. So there's a lot going right and our growth isn't just one brand, it's broad-based. And I said that in my prepared remarks, laundry, litter THERABREATH, waterpick, BATISTE, baking soda. I mean there's a whole host of drivers internationally, like I said before, it's not 1 brand or 2 brands, it's 9 brands that had double-digit growth. They're doing a great job taking our recent acquisitions like THERABREATH and HERO global. And I gave you the example about Japan.

So it's very broad-based. I believe it's very sustainable. And then you throw on top of that the growth initiatives that were -- that we've been working on. Remember, all the time that we spent maybe 1.5 years or 2 years ago on fixing business that kind of were at structural disadvantages, we're spending all that time on innovation and on the growth initiatives. And the growth initiatives are we're laying the groundwork. And I'm going to announce, in January, the category that we're going to go into in the U.S. for ARM & HAMMER, but we have a lot of optimism about that.

And then finally, for International, it's all about also M&A. A year or 2 ago, our M&A portfolio and kind of diligence was all U.S.-based. That's not true anymore. We're looking at acquisitions all the time outside the U.S. And and moving down the field fairly quickly to the filters and that process is getting more repeatable and more sustainable, and I'm optimistic.

Operator

Your next question comes from the line of Kaumil Gajrawala with Jefferies.

Kaumil Gajrawala

I guess you answered a little bit of this in your M&A commentary just now, but maybe if you could put that in the context of the buyback as well. Was this just housekeeping and sort of reauthorizing a plan? Or is there maybe a bigger, broader indication on speed of buyback or how you're sort of envisioning what may or may not be around for M&A in the future?

Richard Dierker

Yes. I would call it more housekeeping than anything. We're getting to the end of our previous authorization. So you always want to make sure you have flexibility as you look forward into the future. That's probably how I'd characterize it.

Lee McChesney

It was a program for '21, so it was time to renew. That's it.

Kaumil Gajrawala

Okay. Got it. And then as it relates to margins, this is a gross margin specifically, you're doing mid-single-digit growth, you'll have some leverage next year, a bit of pricing, it sounds like. But I think you guys, unlike some other companies do incentivize specifically on gross margins. How are you sort of thinking about what is the appropriate target to shoot for, for 2027 in the context of what we're seeing in various input costs to consumer environment, all those types of things.

Richard Dierker

It's a great question. I think I don't think we'll get into that level of detail yet. If you want to ask it again in January, feel free. But we're going to have inflation that's quite large next year. But offsetting that, we're going to have productivity. We have mix as a tailwind typically, especially as you think about THERABREATH or miss mouth, even TOUCHLAND globally. And then like I said before, about fixed cost leverage. So there's a lot of things going in our direction. We always believe that we can expand margin. Just not ready to put that out there yet. It's about 2 or 3 months too soon.

Operator

Your next question comes from the line of Lauren Lieberman with Barclays.

Lauren Lieberman

I just wanted to ask about the revised net sales guidance because the implication for 4Q suggested the structural, the puts and takes of acquisitions and divestitures is a net negative. I think The Street, we were all expecting that to be positive. And given we kind of knew how to think about VMS and the divestitures, it makes me wonder if miss mouth is a bit slower. So just curious if you could talk about missmouth's trends and just sort of conversations on incremental distribution plans for '27 and just also specifically that 4Q dynamic?

Richard Dierker

Yes, sure. I don't remember who asked it previously, maybe it was Peter. I think if you take all the noise away, we are saying that, hey, we've grown 5% for the last 3 quarters. And our outlook for the year is 5%. That makes the math 4%. That was the high end of our range previously. I just don't think we have a lot to gain by going above our our normal range. So maybe we're a little conservative on the quarter call, but it is what it is at 4%. We think 4% is head and shoulders above almost anybody else out there. Lee, anything you want to add to that?

Lee McChesney

Yes. I would just say MissMouth is off to a great start. And the outlook for the year is still very strong. Great, great consumption numbers did really well during the prime day season. So as we have said before, super optimistic, no less optimistic, probably even more optimistic as we look forward.

Operator

Your next question comes from the line of Steve Powers with Deutsche Bank.

Stephen Robert Powers

Okay. One quick housekeeping. Lee, you mentioned the $100 oil. Can you remind me if you guys benchmark to WTI or Brent?

Lee McChesney

Yes, it would be WTI, it's that math. Just to add, just keep in mind, we buy products that are always going to be proportional to oil that a good rough reference for you, okay?

Stephen Robert Powers

Yes. Yes. Perfect. And then I guess another kind of follow-up, Rick, you mentioned TOUCHLAND finishing around about flattish on the year. I guess how does that compare with year-to-date performance, my sense is there's been growth, so that implies maybe some 4Q declines. So if in a faster case, then I understand the overall optimism looking into next year with distribution international, but maybe just how quickly you can turn those declines into positive as we think about the progress into next year?

Richard Dierker

Yes. I would say, we do expect, I think, growth in Q4. I think in Q3, it was slightly negative, but it's sales and shipment timing when you got to get ahead of the different seasons and programs. So for the full year, flattish is the call. I guess I just have a better lens into what retailers have accepted, what programs are in place for displays, how they're going to be set up, as Nick was kind of alluding to, like in at least one major retailer, this is in the beauty set. And the set is absolutely beautiful. It's right where we would want it to be. The displays look great. The packaging is right where we want it to be. And we believe that a lot of times consumers are going to the store and they're looking for this because TOUCHLAND's kind of created a category that didn't really exist and then they don't have the choice to buy the TOUCHLAND brand. There's only 1 alternative. And so we believe that once they are in more of an accessible retail distribution, then consumers will pick the TOUCHLAND product.

I think what we're seeing internationally is also off to a great start. In one retailer just a couple of weeks ago, they sold out in a a matter of hours, what they thought they were going to do for 1 week. So we're trying to make sure we go broad quickly and get through all the regulatory barriers that are in place around the world. And we've made a lot of progress in doing that, and we think we're going to have some great success next year. So that's kind of why I have optimism.

Stephen Robert Powers

Yes, that makes sense. And as does your comments on the exit rate, that helps a lot.

Operator

Your next question comes from the line of Filippo Falorni with Citi.

Filippo Falorni

I have quite a clarification on the cost inflation, the $150 million that you mentioned, Lee. Can you give us a sense of how much is the raw material piece versus the transportation? And just more broadly, I'd love to hear your thoughts on just the transport piece. We're hearing a lot of companies thinking this is a bit more structural, other headwind given shortages in drivers. So like how are you thinking about that potential having continue from here?

Lee McChesney

Yes. I'll start here. I would just say the move from $30 million to $50 million of incremental inflation, it was a mix of commodities and a mix of transportation. Now to your point, the transportation, we're viewing it as the situation is mostly linked to the driver rules in the U.S. and just creating a shortage of drivers. So that's the mindset. And accordingly, we're responding around that trying to make sure we do it the most efficient things in transportation. That's all part of what we're looking into as we put together our plans for '27.

Richard Dierker

Yes. And we're not transportation experts. But I would say that when spot rate rates go up 40%, that's typically transitory, like supply and demand forces balance out over time. And we've seen in years past where we've had large spikes, but over 20 years or so, on average, usually you have 3% to 5% inflation in transportation rates. And so this might be a little bit more structural for a period of time. But over time, it will also balance out.

Filippo Falorni

Got it. Makes sense. And one other one for you, Rick. You mentioned M&A in international. Obviously, this has come up more in recent quarters. Just -- can you just remind us your criteria for M&A and international? Is it the same as your U.S. M&A? Could you potentially think about larger size to get more exposure in some international markets. Any thoughts on your criteria there would be helpful.

Richard Dierker

Yes, fair question. I think the criteria is very similar, but there's just a couple of asterisks. Like, of course, we wanted to be #1 #2 brand. That doesn't go away. Of course, we want to be gross margin accretive, asset light, what's the real competitive advantage I think we're more willing to accept a plant or a factory in these examples because then you can bring in some of our other products potentially. We're more willing to buy an entire business there that you need the entire back office, for example, especially if we're going into a different country. So I think there's a little bit more latitude, but it all makes sense.

Operator

Your next question comes from the line of Edward Lewis with Rothschild & Co.

Edward Lewis

Yes. Rick, I was looking at the e-commerce performance. And it's up at 25.9% of consumer sales in Q3 in this quarter. And you've had quite a significant move in that percentage, I guess, over the past few years, the divestments presumably helped, but how much of an advantage is that giving you at the moment? And is that why you think you're having you're growing ahead of the categories as we talked about and enjoying the share gains, having this level of e-commerce exposure that, frankly, your peers don't really have.

Richard Dierker

Yes. I think that's insightful. I think partially, yes. I think we went from a laggard to a leader on e-commerce growth. And so we've been ahead of the curve for a while now on typically gaining share with these brands online. And when you look at retail, if you take a big step back, a lot of the growth at retail is what, it's coming from e-com. So that's one. I kind of acknowledge that. But number two is mix matters. And some of the businesses that we sold had low exposure to online businesses in sales and some of the businesses that we've bought like TOUCHLAND, like Missmouth are over-indexed to online businesses or online sales. And so that's helped as well. So your portfolio mix also matters.

Operator

Your last question comes from the line of Sergio Matsumoto with TD Cowen.

Unknown Analyst

Calling on behalf of Rob Moskow. Back at the Investor Day, you discussed some retail sales through licensee partners and that you have through an incubator model and potentially reacquiring those brands. Are there any specific licensing categories that are showing good traction perhaps makes sense to bring those brands back in house over the next 20 to -- sorry, 12 to 24 months?

Richard Dierker

Yes. Sergio, that is an excellent question. I'm not going to give you as much as you want. I'll give you an update in January on our Analyst Day about that. I would say there's 1 that we've already taken back, and there's 2 or 3 that we're looking at if they can hit some key thresholds. And there's also a couple that we're going to ask. Sometimes you go through an innovation process internally and then we think it has legs, but maybe another company is better set to get it off the ground. So we're having those conversations as well. So it's pretty broad-based and comprehensive and I'll give you more of an update at our Analyst Day.

Unknown Analyst

Great. Looking forward to it.

Operator

There are no further questions at this time. I will now turn the call back to Mr. Rick Dierker for closing remarks.

Richard Dierker

All right. Thank you very much. We had some fantastic results in Q3. It wasn't possible without a whole group of of people at Church & Dwight to make that happen. So just thanks to the entire team. We'll speak to everyone soon. late January for Analyst Day, really looking forward to that, too. Take care.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.