Okay. Next up this afternoon, we are pleased to welcome back Church & Dwight. We are fortunate to have the company's Chief Executive Officer, Rick Dierker, Chief Financial Officer, Lee McChesney, and Executive Vice President and U.S. Domestic President, Chuck Raup, with us. Rick, I know you have a lot of slides to get through, so no long introduction. I will step away. Thanks so much.
All right. Thanks, Lauren. She is right. We have a lot of slides to get through. It is always good to set a new record each and every time we come to Boston. All right. First and foremost, here is our safe harbor statement. Please take the time to read this. We do have forward-looking statements on our website. Okay, who we are. Our evergreen model is alive and well. I am especially pleased that in 2026, despite the volatile world that we live in, we have been able to have an outlook that encompasses the organic sales growth, evergreen model, and adjusted EPS growth.
Fantastic. Remember, this is the output. There are so many things that go into this that make this work. It is our productivity program, it is our innovation program, it is the way our sales and marketing teams go to market. Lee will go through this a bit more, but just really, really pleased with how we have hit our evergreen model this year. We have strong performance over a long period of time, whether it is 10 years, five years, three years, one year for TSR. We are typically industry-leading. Last year, we took a step back, like many in the industry did. This year, we are taking a big step forward.
How do we do that? We have talked about this briefly before, but what makes Church & Dwight unique and different? One of the things is we do our organic growth fantastically well, right? We have the ability to identify, acquire, integrate, and grow acquisitions. We can do both. If you look at net sales up and to the right over the last 20 years, same thing with earnings, same thing with free cash flow, up and to the right. Organic growth that entire time has been about a 4% CAGR. We can do both of those well, and it creates value.
We are a $6.2 billion company, about three-quarters in the U.S., 18% international, and 5% for SPD. We have seven power brands, and those seven make up 75% of our sales and profits. That is why we talk about those more than any others. We have a winning formula, a balanced and diversified portfolio. We typically do well in any economic environment. Low private label exposure. It was low previously. Now it is even lower. Online success, strong, consistent, category-leading innovation, and we are an acquisitive company.
About half of our business is household, half of it is personal care, about 1/3 of it's value, 2/3 of it's premium. We do well in most economic environments. Low private label exposure, I think, really, if you take a big step back, one of the threats to consumer goods and really food, different industries, is the rise of, I don't even call it private label, I call it store brands. The good news for us, we were industry leading with our weighted average exposure being around 11% or 12% for many, many years. After we sold our vitamin business, that dropped all the way down to 5%.
We are positioned well versus the rest of the industry against private label. Number three, online success. We've gone from laggard to leader, 2% of sales back in 2016. Now 25% of our consumer sales are sold online. Strong, consistent, category-leading innovation across categories. TheraBreath toothpaste, Hero cleansers, Arm & Hammer laundry, cat litter, stain fighters, Trojan. Just a really broad base of category-leading innovation, and that is why we tend to get great distribution points. This year, we were number two across the entire industry on distribution points gained.
A big reason for that was our innovation pipeline. We're an acquisitive company. We really do. We have an ability and a competency of identifying, acquiring, integrating, and growing brands. Many companies want that strategy, but we have decades of experience doing it. We want primarily number one or number two share brands. We want high growth, high margin brands that are fast-moving consumables, asset light, and we want to leverage our internal Church & Dwight manufacturing, logistics, and procurement capabilities, and we also want to deliver sustainable competitive advantage.
We've gone from about a $1.5 billion company back in 2004 to a $6.2 billion, $6.3 billion company today. I wanted to provide a brief update today on our most recent acquisition, which is Miss Mouth. This is a broad spectrum of brands, right? We have a portfolio for Miss Mouth. We have sprays, we have refills, we have pens, wipes, shoe cleaner, and laundry detergent as a small business. We just think this is such a fantastic brand. Look at household penetration. Miss Mouth is 2.5% household penetrated. 50% is the category. 25% is OxiClean. We just have a lot of room to run. Distribution points, similar story.
It was really only distributed online a year ago. Now it's in two other bricks-and-mortar retailers, but we really believe we can use our distribution muscle to help expand this to other classes of trade. It has a great category story, not just for retailers, but for consumers. It's growing the stain fighter category. Category's up 10%. It's because Miss Mouth is up around 50%.
Here's the point about bricks and mortar. It's been largely incremental as we've expanded this business. A year ago, it was only in one online retailer. Today, it's in three. It's actually a 13 share at one retailer already. Look, this is a real problem solution brand. When we were doing diligence on this business, we came across this video that they shared with us, and over 25 million views. I just want to share this magic moment on this mount. Please roll the video.
[Presentation]
Isn't that fantastic? Some of the best advertising you ever see is unintentional, and that is unintentional. There's a bride, spills a wine stain on her wedding dress right before they're going to take pictures, and that wedding photographer fixes it in a minute. Not only is it problem solution, it actually is a magic moment. You can see it before its eyes. We just think that's fit for purpose. Okay, back in January at CAGNY, I walked through some of the growth initiatives. I said, look, U.S. category growth was slowing in general.
Our categories are growing for around 3% for many, many years, and partly because we've got to choose what categories we enter as we did M&A. But if categories were slowing to be 2% or 2.5%, we said, look, consumer confidence is also weak. Those two things put together, we want to make sure we're owning our future. Even if categories slow, we want to be able to make sure that we're growing and hitting or beating our evergreen model.
We put these three initiatives in place. The first one was to grow our Arm & Hammer business. Our aspiration is to go from $2 billion- $3 billion. We want to drive our oral care expansion from $1 billion- $1.5 billion. We want to scale our international business from $1 billion- $2 billion. Here's a quick check-in on those initiatives, and just to re-discuss it again, but we're going to provide a more detailed update in January at our Analyst Day. Over a long period of time, I usually use this slide to talk about M&A.
We had one power brand in the year 2000, it was Arm & Hammer. All the green bars are all those businesses that we've bought and brands we've bought over the past 20 years or so. What's unique, though, is the orange bar. The orange bar is Arm & Hammer. It's gone from $1 billion- $2 billion, a little over $2 billion-plus, over the last 20 years or so. Now the journey is about going from $2 billion-$3 billion . We're going to do that a few different ways, but we have a lot of reasons to believe. It's proven that Arm & Hammer equity can go across categories.
We've launched into these big categories, and we've been very successful. We have a master brand that is so well-known. It has brand equity that's right up there with these other common brands that you see in your everyday life. Finally, we have some Arm & Hammer halo effect for advertising. When we advertise laundry, it helps toothpaste. When we advertise toothpaste, it helps our litter business. Arm & Hammer advertising is so synergistic. Many companies want a mega brand that can go across these different categories, and that's the strategy. I would say we already have one. We have a brand that goes across categories.
It's known for cleaning, known for deodorizing, it's premium in some categories, it's value in others. It's personal care in some categories, it's household in others. It's really an eclectic brand that can do many, many things. I said, "Hey, here are the four areas we're focused on." One is we're going to grow the core, and we're going to keep doing what we've been doing for many years on laundry and litter. We're going to invest in innovation, invest in distribution. We're going to continue to grow that business. Number two, we're going to round out the portfolio on good, better, best. In certain areas, we need to make sure we're playing it at different price tiers.
Number three is really the work we've been focused on the last year or so, is all the new category work. Four is when it makes sense, what brands get launched by a third-party partner, a licensee, and then they get to such a scale that then we take back and grow exponentially from there. Remember, the most common uses of baking soda, there's over 100. It's not us trying to put our, and drive consumer behavior. Consumers are already using baking soda for all of these needs, whether it's cleaning, deodorizing, in the kitchen, the bathtub, in the toilet, removing stains, and the list goes on.
Deodorizing. The brief update is we took three different groups of people. One group was our MPD team, and they spent a lot of time doing the deep dives of the category, where we have the right to play and when. A second group was a high potential mid-level management group within Church & Dwight. They spent months and months on this problem statement and came back with some recommendations. Third, we had a third-party external consulting firm come in and do the same thing.
The good news is with all that work, they coalesced around a similar handful of ideas. I think what I would leave you with today is we're going to launch into one new category in 2027, and we'll go through a lot of the detail on that in January. We're super excited about all the work that's gone into this, and I can't wait to share more. We're driving oral care expansion through TheraBreath. That's the second growth initiative. Look at this, mouthwash is at 12% household penetration for TheraBreath these days, and it's 65% for the category. A lot of room to run. Even as the number two mouthwash, we still have upside on distribution as well.
We want to be in large categories, toothpaste and mouthwash, $2.4 billion for mouthwash, $4.8 billion for toothpaste. We care a lot about getting a share point in these types of categories. We're off to a good start. Our target for 2026 was to get a one share in TheraBreath toothpaste, and we've done that. Chuck will talk through some of the success we're having. Finally, international growth through M&A. Everyone knows our story on international growth, really consistent, high single-digit growth organically for a long time. We've been able to scale some of these brands like Hero and TheraBreath. We're working on scaling Touchland.
It takes a little bit longer because of regulatory requirements, and we think we can also scale Miss Mouth globally, not just here in the U.S. I alluded to it on the last earnings call. What's different? One of the things that's different is the way we do M&A internationally. Two years ago, we put some M&A folks in Europe and Asia. For the first 12 months, we did not make much progress. What changed? We changed the accountability and responsibility of M&A to the country leaders.
The M&A folks support that. When we did that, all of a sudden, the paradigm shifted, and we have gone through almost 100 different deals through the filter in Europe and Asia now. We have a good cadence going through the pipeline. I am really optimistic about international M&A. It is not a matter of if, just when. Let me turn it over to Chuck to walk you through the categories and the brands.
Thanks, Rick. As we look at the U.S. portion of Church & Dwight's business for our evergreen model, we are targeting 3% organic sales growth. Where this growth is going to come from is the seven power brands that Rick just talked about. What is really fantastic about these power brands is the fact that they play in very strong categories that have shown historical growth. In fact, through the front half of 2026, the average growth rate across these categories has been about 3%.
Not only are we playing in advantage categories, but we are also able to grow volume, which is very difficult to do in an environment where the consumer is pressured and there is heightened competition. In addition to that, we are leading our peer set in distribution growth. As we look at our TDP growth year to date, we see that our TDP percent change through the front half of the year is second amongst our peer set.
Not surprisingly, but very encouragingly, this performance has led us to great success with our customers. In 19 out of 20 of our top accounts, we are growing sales. Let us take a look at some of the categories that are driving this performance. First in laundry. Through the front part of the year, we have been able to grow share slightly, and outpace the category 2.5%. We are able to do this in an environment where promotional activity went up for the category, but we actually went down for Church & Dwight.
The strong performance has led us to historical share levels of 14.5%, which has enabled us to retain our position as number one in wash loads. That is exceptionally important because if you think about that really underscores the strong role that we have in the everyday lives of our consumers. As we move forward to delight our consumers and deliver superior value, we are going to leverage our good, better, best strategy. At that base good tier, we will continue to deliver that great fundamental Arm & Hammer clean. In the better tier, what we are doing is we are adding value through things like OxiClean addition to the formula.
Then we are offering premium products like Deep Clean in that best tier. Moving on to litter. We are having a great year on litter, and we are strongly outpacing the category. What that is really behind is twofold. One, we are doing well in our good, better, best strategy in litter as well. In our better tier, we introduced a product called DUAL DEFENSE , which offers superior odor management. Additionally, in our lightweight segment, we have our HardBall product, which is a superior product versus the competition.
The HardBall product has a 49% repeat rate, which is 15 points above the competition. As we look to continue to drive HardBall is about an 8.5% share of lightweight litter. Just moving up to 27.5%, which would be our fair share of lightweight litter, represent a $75 million opportunity. Moving on to TheraBreath. As Rick said, TheraBreath is a shining star in our portfolio, and through the front half of the year, we've grown about 21%, so we are the ones that are driving category growth.
This performance has led us to historically high share, just under 25%. As Rick talked about, we have significant upside in driving brand awareness, capturing additional shelf space, and driving TheraBreath penetration up to category levels. For our Paste launch, we're very happy with the results that we're seeing in Paste. A few key statistics. First, 65% of our sales are incremental to the category. What that shows is consumers are willing to trade up and pay more for a premium oral care product like TheraBreath.
Additionally, we're a number 10 toothpaste brand already. For our online scores, we're at a 4.6 out of 5 stars, which is very strong. It's great to see that instant positive consumer feedback. Moving on to Hero. For the acne category, the acne category showed strong growth through the front half of the year, growing about 5%, and that's about where Hero was, just a little bit below. What we have seen is that there's strong growth in products outside of acne patches, and that underscores why our strategy to meet consumer needs across the acne lifecycle is very important. What are we doing with that?
Well, we just launched our cleansers. We have products like our Micropoint, that's for that initial red bump before you fully get the pimple. We have our Mighty Patch Original for when you actually do have the pimple, and then we have products to address the discoloration once the pimple is gone. What we're going to continue to do is to drive these products and also innovate and find new ways to meet consumer needs across that acne lifecycle. In addition, we still have upside to drive that Mighty Patch Original, and continue accelerated growth.
As we look at from a share perspective, we're right at about 10%, where the acne category is at about 30%, so a ton of headroom. Additionally, given Hero's performance, we want more shelf space than we have right now. So much like TheraBreath, there's upside in capturing shelf space that's more representative of what our brand delivers. Moving on to Touchland. For Touchland, we're a bit behind where we thought we want to be, but the fact is we're very excited about this brand, and there's a lot of reasons to be enthusiastic about Touchland.
First, it is number one in hand sanitizer. Second, it is at a 6% penetration. The category is at nearly a 46%, so there is tremendous headroom to drive penetration. As we have gone through this presentation, you can see that when we get a hold of a brand where there is significant upside in penetration and to really drive a brand forward, we do quite well. Additionally, aided brand awareness is at 23%, but there are other brands within this hand sanitizer category that are more up in the 70% and 80% level, so there is more room to drive our aided awareness for Touchland.
Then finally, we are continuing to grow our TDP base, which shows that customers are interested in driving the category with TheraBreath. As we move outside of the U.S., we are going to see accelerated international growth, and you are going to see some more of that international expansion as we push forward into early 2027, and then we will continue to do that in future years as well. Moving on to innovation. Innovation is a significant part of our growth algorithm. Really what we have done to make sure that we are delivering strong innovation is to revamp our innovation model.
We used to use a single source innovation model, but what we have done over the past couple of years is we have gone to a multiple source model that includes things like third party innovation, classic MPD, white space, and open innovation. What this enables us to do is to, one, identify new consumer occasions that we can meet to drive accelerated growth and also lets us find new ways to meet those new consumer occasions.
This approach has really worked because over 50% of our current innovation now has been identified and it is developed through these other sources of innovative thought. Then as we look in market, our new approach to innovation or upgraded approach to innovation is really working. We used to average about a point, a point and a half of incremental net sales, contributing to our top line growth. It is now around 2%. So in market, we are seeing those stronger results and we are seeing the incrementality of our innovation. We are very excited about the products that we have in market.
We have talked about TheraBreath toothpaste, new products in litter, and also what we are doing for Hero. But we also have innovation that is supporting initiatives like our good, better, best strategy in stain fighting and laundry. What that looks like is things like Baking Soda Fresh in laundry, and also Power Sheets with OxiClean that give the consumer a heightened experience. Additionally, we are developing and really marketing our MaxForce item on OxiClean, and what that does is that takes our stain fighting power to a whole new level.
So across our portfolio, our innovation algorithm and our way of working is really delivering, and we will continue to leverage our innovation model to drive new innovation across all of these categories moving forward, ensuring that we have a strong innovation pipeline as part of our evergreen model. With that, I am going to turn things back over to Rick to talk about our international business.
All right. Thanks, Chuck. Same algorithm for this division. 8% is what we target. Remember, our international business is about $1.1 billion. Our aspiration is to get it to $2 billion over the next few years. Today, about 1/3 of that is our global markets group, which goes through distributor. The largest sub is Canada. International has a long track record of just success from a high single digit perspective. We are still under-indexed. I think we are still in the early innings of international growth. About 18% of our sales, many other companies are a lot higher than that.
As we take these brands across the world, they are starting to scale. We are at scale in many of these countries. Waterpik, Arm & Hammer, OxiClean, we are leveraging from the U.S. Batiste, Stérimar, Femfresh are brands that are really in our international business and do really well. TheraBreath, Hero, Touchland are ones that we are rapidly scaling. Hero, for example, we have already distributed out into 75 different countries. We are the number one patch in many countries already.
Touchland is next in line. You heard Chuck kind of go through that detail. We have a lot of demand pulling for Touchland globally. As we have evolved international, we are starting to get to the point where we can really do, not just local manufacturing, but local insights. We have great use cases in China as an example, that we are doing Batiste and dry shampoo for that market specifically. In Japan, we are doing liquid OxiClean, made for that market. As we move on, SPD is a 5% evergreen model for growth.
That business is about 2/3 animal nutrition and about 1/3 specialty chemicals, a $300 million business. Just a reminder, a couple of years ago, this was a very cyclical business, and it was up one year, down the next. We shut down, about two years ago, a business that was a lot of revenue, but not much profit. Once we did that, you can really see the core of SPD is not just consistent, but just the definition of consistent. 10 quarters of growth, through all this turmoil and volatility over the last few years.
Okay, how we operate. I have gone through this slide many times, how we leverage brands. Chuck talked about our categories and our brands, how we are a friend of the environment. We have walked through how we were one of the original sponsors of Earth Day, how we leverage people. We're a lean company. One of the benefits of being lean is fast decision-making, it enables execution, how we leverage assets. We're an asset-light model, typically. Then how we leverage acquisitions, and good returns become great returns over many, many years as we have the ability to acquire businesses.
All of these things are also being enabled today with AI. First and foremost, we're training the entire organization. We have 101, 201, 301 classes. We've gotten each and every salaried employee access to the latest LLM models, and we're letting individuals really do their work in a more effective way. Next, we're also doing massive projects across the enterprise. We're doing one on revenue growth management.
We're doing one on content creation. We're doing one on R&D to help with formulation. We're doing some stuff in supply chain. I'm glad to say that we're off the starting blocks, and how we really attacked our e-com sales years ago. We went from 2%- 25%. I really feel like now that we're off the starting blocks, we're going to make this a big advantage for the company. With that, I'll turn it over to Lee to walk through the financials.
Thank you. All right. Okay, so I'll bring us home with a financial story of Church & Dwight. For us, just like Rick talked about, this starts with the evergreen model. This is the foundation of really, Rick talked about all the inputs that go into this wonderful output. For those who are new to our story, it's really about balance. We're pursuing 4% organic growth and 8% EPS growth. So we're looking for that growth and the leverage to come through as well. That's what the evergreen model calls for.
At these sessions, we like to talk about just the scorecard of how we're doing against this. I'm going to start, and I'm going to do it not just from a one-year, two-year look. I'm going to look back an entire decade here of how we're doing. Organic growth, again, 4% goal. We've delivered 4.1% on average over the past decade and all the things that happened. In our July 31st outlook, we shared an update for the outlook for the year, for 2026, and we're actually at 4%-5%, so actually slightly higher than our evergreen model.
When you click into what drives this, all the things you just saw from Rick and Chuck, this also shows through when you take that organic down to just a volume perspective here. You look at the consistent volume-driven growth to organic growth. It's really about making sure you have the right categories, the right innovation, the right way of going to market. This is how you drive steady volume-based organic growth. Then we go to adjusted gross margin. The evergreen model calls for 25 basis points- 50 basis points of improvement.
If you think about what happened post-COVID, you see the momentum we have had with gross margin come to light. It is all the different tools in the toolkit. This year, as you think about 100 basis points- 120 basis points in our July 31st outlook, it is also the benefit of our strategic portfolio actions last year. The combination of those are driving this really good story of the gross margin. As I said, within the evergreen model, every year, we are looking for 25 basis points- 50 basis points, and we have an entire toolkit that we bring to life every day to drive that performance.
Whether it is classic productivity, it is NPE, it is the acquisitions and what they do from an execution perspective, RGM, and it is built into our set of plans across the organization. Improving gross margin is not for a portion of the organization. It is for the entire organization rallying around that, and it is why you have seen the progress you have seen over the last several years. With that background on sales, on gross margin, we make a steady, consistent investment on marketing of approximately 11%. You think about the opportunity we have here.
We have seven brands, again, driving 75% of our sales. We can make really smart investments in these brands and really drive wonderful returns out of them. Again, it is in categories. Chuck talked about this. These are categories that are growing, so there is really strong returns on this investment in marketing. We are always looking to do at this level, and if there are opportunities between sales gross margin, we will even do more. SG&A, the evergreen model typically calls for kind of flat to 25 basis points of improvement.
In our outlook for the year from July, it is an outlook of being higher, and that is really driven by two things. We have the strategic portfolio actions, which again, was about $400 million of sales coming out of the portfolio, so you have a little bit of that effect. Then you had Touchland's amortization in SG&A, and as part of our July outlook, we also have Miss Mouth's in the SG&A for the year. You think about this again, the evergreen model, and this is a decade scorecard on EPS.
Evergreen targets 8%, and that is what we have done for the past decade, despite all the macro events that go on in the world, the formula that we have here, all those inputs Rick kicked us off with, that is driving a consistent 8% growth over the last decade. Specifically for 2026, I have mentioned this a few times, we updated our outlook in July. Our organic growth went up to 4%-5%, before it was 3%-4%, and our EPS improved to 6%-8% versus 5%-8% before.
Based on the first half of the year, we had two quarters with 5% organic growth. That momentum going to the back half. We also had the Miss Mouth's acquisition, all those elements driving to this improved outlook for the full year. If we move from there to just what the performance of the evergreen model does, we have wonderful cash flow. For the past decade, we have 119% multiple. Most people target below 100%. This is an incredible strength for us. It gives us so much more opportunities to invest in our business. That also shows through the debt to EBITDA.
Today we are sitting in this 1.5x, 1.6x level. That is after doing Touchland, that is after doing Miss Mouth's, that is after doing $900 million of share buybacks last year. It really speaks to the cash flow generation of Church & Dwight. Today, we have over $5 billion of capacity after all those actions, all that progress over the last several years. Where are we going to focus that? Our prioritized use of cash flow, it is pretty consistent. I like to say 1A, 1B, 1C is really investing in TSR accretive M&A. From there, we certainly invest in organic growth and productivity, new product development.
When there are opportunities to pay down debt, we do debt reduction. Today, we just have fixed-rate debt. Then ultimately returning cash to shareholders. The strength of that cash flow, and really the prioritization here, also shows through when you think about it from a dividend perspective, 125 years of consecutive dividend and 30 years of consecutive increases. As we think about where we are in this outlook we gave in July, we have confidence in that outlook, and we have confidence as we look forward here, whether it is the categories we are in, the innovation you hear from us, what we are doing with our acquisitions, the growth opportunities, that gives us all confidence as we look forward in our Church & Dwight portfolio. With that, we will take one minute for questions.
If you want to do one question, you can, but if not, that is fine, too. Up to you.
I will just do one and then.
Mm-hmm. Sure.
Just one thing as well is higher freight costs. Just what are you guys seeing on that front, and is there any updates on that anymore?
Yeah. The question is really about higher freight costs that people are seeing. I would say, one of the things about our company is we are super transparent, and I feel like we had that conversation in July, and we kind of pointed to transportation costs, even in the second quarter, being a little bit of a headwind. I feel like we have kind of contemplated that, and as costs go up, we are going to do our best to offset that with productivity, like we said we were going to do two quarters ago, and we are doing.
State of the consumer, really quick, in 10 seconds or less, I would say, look, consumer confidence is low, but the consumer is resilient, too. Consumer spending has actually held up pretty well, and it depends what categories you are in. For our categories, they have been relatively healthy, still between 2% and 3%. We continue to execute well.
Great. We'll end there and go to breakout. Please join me in thanking Church & Dwight for being here.