Highlights:
- Q3 2024 sales were $1.2 billion, a decrease of 8 percent
versus Q3 2023; organic sales excluding the impact of China were
down 5 percent
- Q3 2024 earnings per share (EPS) were $1.09, an increase of
2 percent versus a year ago; EPS before charges / gains were $1.16,
a decrease of 3 percent versus Q3 2023
- Company updates full-year 2024 guidance to reflect current
market conditions and impact of recent hurricanes
Fortune Brands Innovations, Inc. (NYSE: FBIN or “Fortune Brands”
or the “Company”), an industry-leading innovation company whose
purpose is to elevate every life by transforming spaces into
havens, today announced third quarter 2024 results.
“Our teams continued to execute in a very dynamic market. We
again delivered margin expansion despite the unfavorable
macroeconomic environment,” said Fortune Brands Chief Executive
Officer Nicholas Fink. “We are focused on a key set of strategic
priorities, in both our core product lines and our digital
products, which we expect will drive our future growth once demand
inflects positively.”
Fink continued, “We remain fully confident in our strategy, and
have taken action to be a leaner and more agile company while
continuing to invest in our highest-growth opportunities. Fortune
Brands is well positioned for future growth.”
Third Quarter 2024 Results
($ in millions, except per share amounts) Unaudited
Total Company Results
Reported Net Sales
Operating Income
Operating Margin
EPS
Q3 2024 GAAP
$1,155
$205.1
17.8%
$1.09
Change
(8%)
4%
220 bps
2%
Reported Net Sales
Operating Income Before Charges /
Gains
Operating Margin Before Charges
/ Gains
EPS Before Charges /
Gains
Q3 2024 Non-GAAP
$1,155
$215.9
18.7%
$1.16
Change
(8%)
(2%)
130 bps
(3%)
Segment Results
Net Sales
Change
Operating Margin
Change
Operating Margin Before
Charges/Gains
Change
Reported
Organic
Reported
Organic
Water Innovations
$635
$630
(8%)
(7%)
23.8%
(10) bps
24.6%
40 bps
Outdoors
$343
$343
(6%)
(6%)
16.9%
270 bps
18.0%
320 bps
Security
$178
$178
(14%)
(12%)
18.6%
1,040 bps
19.3%
250 bps
Balance Sheet and Cash
Flow
The Company exited the quarter with a strong balance sheet, and
generated $205 million of operating cash flow and $176 million of
free cash flow in the quarter. In accordance with its
opportunistic, returns-based share repurchase program, the Company
repurchased $35 million of shares in the quarter, and as of
November 6, 2024, has repurchased $190 million of shares year to
date.
As of the end of the third quarter 2024:
Net debt
$2.4 billion
Net debt to EBITDA before charges /
gains
2.5x
Cash
$345 million
Amount available under revolving credit
facility
$1,145 million
2024 Market and Financial
Guidance
“We focused on executing our strategic priorities and delivered
strong margin results in a soft environment. We are updating our
full-year 2024 guidance to reflect current market conditions, which
include lower POS performance, incremental channel destocking and
short-term impacts from recent hurricanes,” said Fortune Brands
Chief Financial Officer David Barry. “Our team is navigating these
near-term challenges while also executing multiple strategic
initiatives which will enable FBIN to drive long-term growth when
our end markets improve. We continue to have full confidence in our
long-term strategy.”
Updated 2024 Full-Year Guidance
Prior 2024 Full-Year Guidance
Updated 2024 Full-Year Guidance
MARKET
Global market
-3% to -1%
-3.5% to -1.5%
U.S. market
-1% to flat
-1% to flat
U.S. R&R
-4% to -3%
-4% to -3%
U.S. SFNC
8% to 10%
7% to 9%
China market
-20% to -15%
-20% to -15%
TOTAL COMPANY FINANCIAL METRICS
Net sales
2.5% to 4.5%
Flat to 1%
Net sales [organic]
-2% to flat
-4.5% to -3.5%
Operating margin before charges /
gains
17.0% to 17.5%
17.0% to 17.25%
EPS before charges / gains
$4.25 to $4.35
$4.17 to $4.23
Cash flow from operations
Around $700 million
Around $650 million
Free cash flow
Around $500 million
Around $475 million
Cash conversion
Around 100%
Around 100%
SEGMENT FINANCIAL METRICS
Water Innovations net sales
2.5% to 4.5%
1% to 1.5%
Water Innovations net sales [organic]
-4% to -2%
-5% to -4.5%
Water Innovations operating margin before
charges / gains
Around 24%
Around 23.5%
Outdoors net sales
2% to 4%
Flat to 1%
Outdoors operating margin before charges /
gains
14.5% to 15.5%
16.0% to 16.5%
Security net sales
5% to 7%
-2% to -1%
Security net sales [organic]
-3% to -1%
-10% to -9%
Security operating margin before charges /
gains
15.5% to 16.5%
16.5% to 17.0%
OTHER ITEMS
Corporate expense
$143 million to $148 million
$149 million to $151 million
Interest expense
$122 million to $124 million
$122 million to $124 million
Other income / (expense)
Around $5 million
Around $7 million
Capex
Around $200 million
Around $175 million
Tax rate
23.25% to 23.5%
22.25% to 22.5%
Share count
Around 126 million
Around 126 million
For certain forward-looking non-GAAP measures (as used in this
press release, operating margin before charges / gains on a full
Company and segment basis, EPS before charges / gains and cash
conversion), the Company is unable to provide a reconciliation to
the most comparable GAAP financial measure because the information
needed to reconcile these measures is unavailable due to the
inherent difficulty of forecasting the timing and / or amount of
various items that have not yet occurred, including the high
variability and low visibility with respect to gains and losses
associated with our defined benefit plans, which are excluded from
EPS before charges / gains and cash conversion, and restructuring
and other charges, which are excluded from operating margin before
charges / gains, EPS before charges / gains and cash conversion.
Additionally, estimating such GAAP measures and providing a
meaningful reconciliation consistent with the Company’s accounting
policies for future periods requires a level of precision that is
unavailable for these future periods and cannot be accomplished
without unreasonable effort. Forward-looking non-GAAP measures are
estimated consistent with the relevant definitions and
assumptions.
Conference Call Details
Today at 5:00 p.m. ET, Fortune Brands will host an investor
conference call to discuss results. A live internet audio webcast
of the conference call will be available on the Fortune Brands
website at ir.fbin.com/upcoming-events. It is recommended that
listeners log on at least 10 minutes prior to the start of the
call. A recorded replay of the call will be made available on the
Company’s website shortly after the call has ended.
About Fortune Brands
Innovations
Fortune Brands Innovations, Inc. is an industry-leading
innovation company dedicated to creating smarter, safer and more
beautiful homes and improving lives. The Company’s driving purpose
is to elevate every life by transforming spaces into havens.
The Company is a brand, innovation and channel leader focused on
exciting, supercharged categories in the home products, security
and commercial building markets. The Company’s portfolio of brands
includes Moen, House of Rohl, Aqualisa, SpringWell, Therma-Tru,
Larson, Fiberon, Master Lock, SentrySafe and Yale residential.
Fortune Brands is headquartered in Deerfield, Illinois and
trades on the NYSE as FBIN. To learn more, visit www.FBIN.com.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements that are
made pursuant to the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include all statements that are not historical
statements of fact and those regarding our intent, belief or
expectations for our business, operations, financial performance or
financial condition in addition to statements regarding our
expectations for the markets in which we operate, general business
strategies, the market potential of our brands, trends in the
housing market, the potential impact of costs, including material
and labor costs, the potential impact of inflation, expected
capital spending, expected pension contributions or de-risking
initiatives, the expected impact of acquisitions, dispositions and
other strategic transactions, the anticipated impact of recently
issued accounting standards on our financial statements, and other
matters that are not historical in nature. Statements preceded by,
followed by or that otherwise include the words “believes,”
“expects,” “anticipates,” “intends,” “projects,” “estimates,”
“plans,” “outlook,” “positioned,” "confident," "opportunity,"
"focus" and similar expressions or future or conditional verbs such
as “will,” “should,” “would,” “may,” and “could” are generally
forward-looking in nature and not historical facts. Where, in any
forward-looking statement, we express an expectation or belief as
to future results or events, such expectation or belief is based on
current expectations, estimates, assumptions and projections of our
management about our industry, business and future financial
results, available at the time this press release is issued.
Although we believe that these statements are based on reasonable
assumptions, they are subject to numerous factors, risks and
uncertainties that could cause actual outcomes and results to be
materially different from those indicated in such statements,
including but not limited to: (i) our reliance on the North
American and Chinese home improvement, repair and remodel and new
home construction activity levels, (ii) the housing market,
downward changes in the general economy, unfavorable interest rates
or other business conditions, (iii) the competitive nature of
consumer and trade brand businesses, (iv) our ability to execute on
our strategic plans and the effectiveness of our strategies in the
face of business competition, (v) our reliance on key customers and
suppliers, including wholesale distributors and dealers and
retailers, (vi) risks relating to rapidly evolving technological
change, (vii) risks associated with our ability to improve
organizational productivity and global supply chain efficiency and
flexibility, (viii) risks associated with global commodity and
energy availability and price volatility, as well as the
possibility of sustained inflation, (ix) delays or outages in our
information technology systems or computer networks or breaches of
our information technology systems or other cybersecurity
incidents, (x) risks associated with doing business globally,
including changes in trade-related tariffs and risks with uncertain
trade environments, (xi) risks associated with the disruption of
operations, including as a result of severe weather events, (xii)
our inability to obtain raw materials and finished goods in a
timely and cost-effective manner, (xiii) risks associated with
strategic acquisitions, divestitures and joint ventures, including
difficulties integrating acquired companies and the inability to
achieve the expected financial results and benefits of
transactions, (xiv) impairments in the carrying value of goodwill
or other acquired intangible assets, (xv) risks of increases in our
defined benefit-related costs and funding requirements, (xvi) our
ability to attract and retain qualified personnel and other labor
constraints, (xvii) the effect of climate change and the impact of
related changes in government regulations and consumer preferences,
(xviii) risks associated with environmental, social and governance
matters, (xix) potential liabilities and costs from claims and
litigation, (xx) changes in government and industry regulatory
standards, (xxi) future tax law changes or the interpretation of
existing tax laws, (xxii) our ability to secure and protect our
intellectual property rights, and (xxiii) the impact of COVID-19 on
the business. These and other factors are discussed in Part I, Item
1A “Risk Factors” of our Annual Report on Form 10-K for the year
ended December 30, 2023. We undertake no obligation to, and
expressly disclaim any such obligation to, update or clarify any
forward-looking statements to reflect changed assumptions, the
occurrence of anticipated or unanticipated events, new information
or changes to future results over time or otherwise, except as
required by law.
Use of Non-GAAP Financial Information
This press release includes measures not derived in accordance
with generally accepted accounting principles (“GAAP”), such as
diluted earnings per share before charges / gains, operating income
before charges / gains, operating margin before charges / gains,
net debt, net debt to EBITDA before charges / gains, sales
excluding the impact of acquisitions (organic sales), organic sales
excluding the impact of China, free cash flow and cash conversion.
These non-GAAP measures should not be considered in isolation or as
a substitute for any measure derived in accordance with GAAP and
may also be inconsistent with similar measures presented by other
companies. Reconciliations of these measures to the applicable most
closely comparable GAAP measures, and reasons for the Company’s use
of these measures, are presented in the attached pages.
FORTUNE BRANDS INNOVATIONS,
INC.
(In millions)
(Unaudited)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
Net sales (GAAP)
September 28, 2024
September 30, 2023
$ Change
% Change
September 28, 2024
September 30, 2023
$ Change
% Change
Water
$
635.1
$
688.0
$
(52.9
)
(8
)
$
1,920.0
$
1,899.2
$
20.8
1
Outdoors
342.7
366.4
(23.7
)
(6
)
1,047.1
1,031.9
15.2
2
Security
177.5
206.8
(29.3
)
(14
)
537.7
533.8
3.9
1
Total net sales
$
1,155.3
$
1,261.2
$
(105.9
)
(8
)
$
3,504.8
$
3,464.9
$
39.9
1
RECONCILIATIONS OF GAAP OPERATING
INCOME TO OPERATING INCOME BEFORE CHARGES/GAINS
(In millions)
(Unaudited)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
$ Change
% Change
September 28, 2024
September 30, 2023
$ Change
% Change
WATER
Operating income (GAAP)
$
151.4
$
164.2
$
(12.8
)
(8
)
$
443.6
$
434.7
$
8.9
2
Restructuring charges
3.4
-
3.4
100
4.9
1.3
3.6
277
Other charges/(gains)
Cost of products sold
1.6
0.1
1.5
1,500
2.4
0.3
2.1
700
Amortization of inventory step-up (f)
-
2.0
(2.0
)
(100
)
0.3
2.0
(1.7
)
(85
)
Operating income before charges/gains
(a)
$
156.4
$
166.3
$
(9.9
)
(6
)
$
451.2
$
438.3
$
12.9
3
OUTDOORS
Operating income (GAAP)
$
57.8
$
52.0
$
5.8
11
$
143.9
$
126.2
$
17.7
14
Restructuring charges
2.4
-
2.4
100
4.9
3.1
1.8
58
Other charges/(gains)
Cost of products sold
1.4
1.4
-
-
13.8
(0.4
)
14.2
(3,550
)
Selling, general and administrative
expenses
-
0.1
(0.1
)
(100
)
-
-
-
-
Solar compensation (e)
-
0.8
(0.8
)
(100
)
0.2
2.1
(1.9
)
(90
)
Asset impairment charge
-
-
-
-
-
-
-
-
Operating income before charges/gains
(a)
61.6
54.3
$
7.3
13
162.8
131.0
$
31.8
24
SECURITY
Operating income (GAAP)
$
33.0
$
17.0
$
16.0
94
$
86.5
$
37.8
$
48.7
129
Restructuring charges
0.8
3.7
(2.9
)
(78
)
3.1
23.8
(20.7
)
(87
)
Other charges/(gains)
Cost of products sold
0.5
5.1
(4.6
)
(90
)
7.7
12.7
(5.0
)
(39
)
Amortization of inventory step-up (f)
-
8.9
(8.9
)
(100
)
-
8.9
(8.9
)
(100
)
Operating income before charges/gains
(a)
$
34.3
$
34.7
$
(0.4
)
(1
)
$
97.3
$
83.2
$
14.1
17
CORPORATE
Corporate expense (GAAP)
$
(37.1
)
$
(36.7
)
$
0.4
1
$
(114.4
)
$
(117.7
)
$
(3.3
)
(3
)
Restructuring charges
0.8
-
(0.8
)
(100
)
1.2
0.7
(0.5
)
(71
)
Other charges/(gains)
Selling, general and administrative
expenses
-
0.1
0.1
100
-
0.2
0.2
100
ASSA transaction expenses (d)
(0.1
)
1.2
1.3
108
1.0
18.7
17.7
95
General and administrative expenses
before charges/gains (a)
$
(36.4
)
$
(35.4
)
$
1.0
3
$
(112.2
)
$
(98.1
)
$
14.1
14
TOTAL COMPANY
Operating income (GAAP)
$
205.1
$
196.5
$
8.6
4
$
559.6
$
481.0
$
78.6
16
Restructuring charges
7.4
3.7
3.7
100
14.1
28.9
(14.8
)
(51
)
Other charges/(gains)
Cost of products sold
3.5
6.6
(3.1
)
(47
)
23.9
12.6
11.3
90
Selling, general and administrative
expenses
-
0.2
(0.2
)
(100
)
-
0.2
(0.2
)
(100
)
Solar compensation (e)
-
0.8
(0.8
)
(100
)
0.2
2.1
(1.9
)
(90
)
ASSA transaction expenses (d)
(0.1
)
1.2
(1.3
)
(108
)
1.0
18.7
(17.7
)
(95
)
Amortization of inventory step-up (f)
-
10.9
(10.9
)
(100
)
0.3
10.9
(10.6
)
(97
)
Operating income before charges/gains
(a)
$
215.9
$
219.9
$
(4.0
)
(2
)
$
599.1
$
554.4
$
44.7
8
(a) (d) (e) (f) For definitions of Non-GAAP measures, see
Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (GAAP)
(In millions)
(Unaudited)
September 28, 2024
December 30, 2023
Assets
Current assets
Cash and cash equivalents
$
344.8
$
366.4
Accounts receivable, net
555.9
534.2
Inventories
962.6
982.3
Other current assets
155.8
162.8
Total current assets
2,019.1
2,045.7
Property, plant and equipment, net
981.6
975.0
Goodwill
2,004.7
1,906.8
Other intangible assets, net of
accumulated amortization
1,324.3
1,354.7
Other assets
268.7
282.8
Total assets
$
6,598.4
$
6,565.0
Liabilities and equity
Current liabilities
Short-term debt
$
499.5
$
-
Accounts payable
493.3
568.1
Other current liabilities
539.4
632.3
Total current liabilities
1,532.2
1,200.4
Long-term debt
2,277.8
2,670.1
Deferred income taxes
126.2
111.3
Other non-current liabilities
266.3
289.8
Total liabilities
4,202.5
4,271.6
Stockholders' equity
2,395.9
2,293.4
Total equity
2,395.9
2,293.4
Total liabilities and equity
$
6,598.4
$
6,565.0
FORTUNE BRANDS INNOVATIONS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
Operating activities
Net income
$
366.8
$
323.2
Depreciation and amortization
147.4
111.5
Non-cash lease expense
29.3
23.9
Deferred taxes
18.1
(11.5
)
Other non-cash items
30.7
24.9
Changes in assets and liabilities, net
(196.8
)
363.6
Net cash provided by operating
activities
$
395.5
$
835.6
Investing activities
Capital expenditures
$
(133.1
)
$
(175.7
)
Proceeds from the disposition of
assets
6.8
2.8
Cost of acquisitions, net of cash
acquired
(129.0
)
(784.1
)
Other investing activities, net
(3.4
)
-
Net cash used in investing
activities
$
(258.7
)
$
(957.0
)
Financing activities
Increase in debt, net
$
105.0
$
155.1
Proceeds from the exercise of stock
options
10.4
8.8
Treasury stock purchases
(190.4
)
(120.1
)
Dividends to stockholders
(90.0
)
(87.8
)
Other items, net
(18.1
)
(16.6
)
Net cash provided by financing
activities
$
(183.1
)
$
(60.6
)
Effect of foreign exchange rate changes on
cash
$
0.8
$
(7.7
)
Net increase (decrease) in cash and cash
equivalents
$
(45.5
)
$
(189.7
)
Cash, cash equivalents and restricted
cash* at beginning of period
395.5
648.3
Cash, cash equivalents and restricted
cash* at end of period
$
350.0
$
458.6
FREE CASH
FLOW
Thirty-Nine Weeks
Ended
2024 Full Year
September 28, 2024
September 30, 2023
Estimate
Cash flow from operations
(GAAP)
$
395.5
$
835.6
$
650.0
Less:
Capital expenditures
$
133.1
$
175.7
$
175.0
Free cash flow**
$
262.4
$
659.9
$
475.0
*Restricted cash of $2.4 million and $2.8 million is included in
Other current assets and Other assets, respectively, as of
September 28, 2024. Restricted cash of $3.0 million and $2.1
million is included in Other current assets and Other assets,
respectively, as of September 30, 2023.
** Free cash flow is cash flow from operations calculated in
accordance with U.S. generally accepted accounting principles
("GAAP") less capital expenditures. Free cash flow does not include
adjustments for certain non-discretionary cash flows such as
mandatory debt repayments. Free cash flow is a measure not derived
in accordance with GAAP. Management believes that free cash flow
provides investors with helpful supplemental information about the
Company's ability to fund internal growth, make acquisitions, repay
debt and related interest, pay dividends and repurchase common
stock. This measure may be inconsistent with similar measures
presented by other companies.
FORTUNE BRANDS INNOVATIONS,
INC.
CASH FLOW FROM OPERATIONS (GAAP) TO
FREE CASH FLOW
(In millions)
(Unaudited)
Thirteen Weeks Ended
September 28, 2024
Cash flow from operations
(GAAP)
$
205.3
Less:
Capital expenditures
29.7
Free cash flow*
$
175.6
* Free cash flow is cash flow from operations calculated in
accordance with U.S. generally accepted accounting principles
("GAAP") less capital expenditures. Free cash flow does not include
adjustments for certain non-discretionary cash flows such as
mandatory debt repayments. Free cash flow is a measure not derived
in accordance with GAAP. Management believes that free cash flow
provides investors with helpful supplemental information about the
Company's ability to fund internal growth, make acquisitions, repay
debt and related interest, pay dividends and repurchase common
stock. This measure may be inconsistent with similar measures
presented by other companies.
FORTUNE BRANDS INNOVATIONS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (GAAP)
(In millions, except per share
amounts)
(Unaudited)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Net sales
$
1,155.3
$
1,261.2
(8
)
$
3,504.8
$
3,464.9
1
Cost of products sold
625.5
721.1
(13
)
1,946.4
2,048.4
(5
)
Selling, general and administrative
expenses
298.2
321.1
(7
)
929.5
862.6
8
Amortization of intangible assets
19.1
18.8
2
55.2
44.0
25
Restructuring charges
7.4
3.7
100
14.1
28.9
(51
)
Operating income
205.1
196.5
4
559.6
481.0
16
Interest expense
30.2
33.3
(9
)
92.6
87.9
5
Other (income)/expense, net
(1.6
)
(9.4
)
(83
)
(5.2
)
(20.9
)
(75
)
Income from continuing operations
before taxes
176.5
172.6
2
472.2
414.0
14
Income tax
39.9
36.1
11
105.4
89.8
17
Income from continuing operations, net
of tax
$
136.6
$
136.5
-
$
366.8
$
324.2
13
Loss from discontinued operations, net
of tax
-
-
-
-
(1.0
)
(100
)
Net income
$
136.6
$
136.5
-
$
366.8
$
323.2
13
Net income attributable to Fortune
Brands
$
136.6
$
136.5
-
$
366.8
$
323.2
13
Diluted earnings per common
share
Continuing operations
$
1.09
$
1.07
2
$
2.91
$
2.53
15
Discontinued operations
$
-
$
-
-
$
-
$
-
-
Diluted EPS attributable to Fortune
Brands
$
1.09
$
1.07
2
$
2.91
$
2.53
15
Diluted average number of shares
outstanding
125.1
127.8
(2
)
126.0
127.9
(1
)
FORTUNE BRANDS INNOVATIONS,
INC.
(In millions)
(Unaudited)
RECONCILIATIONS OF INCOME FROM
CONTINUING OPERATIONS, NET OF TAX TO EBITDA BEFORE
CHARGES/GAINS
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Income from continuing operations, net
of tax
$
136.6
$
136.5
-
$
366.8
$
324.2
13
Depreciation *
$
22.7
$
21.0
8
$
69.6
$
59.6
17
Amortization of intangible assets
19.1
18.8
2
55.2
44.0
25
Restructuring charges
7.4
3.7
100
14.1
28.9
(51
)
Other charges/(gains)
3.5
6.8
(49
)
23.9
12.8
87
ASSA transaction expenses (d)
(0.1
)
1.2
(108
)
1.0
18.7
(95
)
Solar compensation (e)
-
0.8
(100
)
0.2
2.1
(90
)
Amortization of inventory step-up (f)
-
10.9
(100
)
0.3
10.9
(97
)
Interest expense
30.2
33.3
(9
)
92.6
87.9
5
Defined benefit plan actuarial
gains/(losses)
(0.3
)
(2.4
)
(88
)
(0.3
)
(2.4
)
(88
)
Income taxes
39.9
36.1
11
105.4
89.8
17
EBITDA before charges/gains (c)
$
259.0
$
266.7
(3
)
$
728.8
$
676.5
8
* Depreciation excludes accelerated depreciation expense of $4.1
million for the thirteen weeks ended September 28, 2024, and $22.6
million for the thirty-nine weeks ended September 28, 2024 and
excludes accelerated depreciation expense of $5.7 million for the
thirteen weeks ended September 30, 2023, and $7.9 million for the
thirty-nine weeks ended September 30, 2023. Accelerated
depreciation is included in other charges/gains.
CALCULATION OF NET DEBT-TO-EBITDA
BEFORE CHARGES/GAINS RATIO
As of September 28, 2024
Short-term debt **
$
499.5
Long-term debt **
2,277.8
Total debt
2,777.3
Less:
Cash and cash equivalents **
344.8
Net debt (1)
$
2,432.5
Fifty-two weeks ended September 28,
2024
EBITDA before charges/gains (2) (c)
$
961.8
Net debt-to-EBITDA before charges/gains
ratio (1/2)
2.5
** Amounts are per the Unaudited Condensed Consolidated Balance
Sheet as of September 28, 2024.
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
Fifty-Two Weeks Ended
December 30, 2023
September 28, 2024
September 28, 2024
Income from continuing operations, net
of tax
$
81.3
$
366.8
$
448.1
Depreciation***
$
30.8
$
69.6
$
100.4
Amortization of intangible assets
18.1
55.2
73.3
Restructuring charges
3.6
14.1
17.7
Other charges/(gains)
9.3
23.9
33.2
ASSA transaction expenses (d)
1.1
1.0
2.1
Solar compensation (e)
0.6
0.2
0.8
Amortization of inventory step-up (f)
1.5
0.3
1.8
Interest expense
28.7
92.6
121.3
Asset impairment charge (g)
33.5
-
33.5
Defined benefit plan actuarial gains
1.9
(0.3
)
1.6
Income taxes
22.6
105.4
128.0
EBITDA before charges/gains (c)
$
233.0
$
728.8
$
961.8
*** Depreciation excludes accelerated depreciation expense of
$22.6 million for the thirty-nine weeks ended September 28, 2024,
and $8.4 million for the thirteen weeks ended December 30, 2023.
Accelerated depreciation is included in other charges/gains.
(c) (d) (e) (f) (g) For definitions of Non-GAAP measures, see
Definitions of Terms page
RECONCILIATION OF DILUTED EPS FROM CONTINUING OPERATIONS
BEFORE CHARGES/GAINS
For the thirteen weeks ended September 28, 2024, the diluted EPS
before charges/gains is calculated as income from continuing
operations on a diluted per-share basis, excluding $7.4 million
($5.6 million after tax or $0.05 per diluted share) of
restructuring charges and $3.4 million ($2.6 million after tax or
$0.02 per diluted share) of other charges/gains.
For the thirty-nine weeks ended September 28, 2024, the diluted
EPS before charges/gains is calculated as income from continuing
operations on a diluted per-share basis, excluding $14.1 million
($10.7 million after tax or $0.09 per diluted share) of
restructuring charges and $25.4 million ($19.3 million after tax or
$0.15 per diluted share) of other charges/gains.
For the thirteen weeks ended September 30, 2023, the diluted EPS
before charges/gains is calculated as income from continuing
operations on a diluted per-share basis, excluding $3.7 million
($2.8 million after tax or $0.02 per diluted share) of
restructuring charges, $6.8 million ($5.2 million after tax or
$0.03 per diluted share) of other charges/gains, $1.2 million ($0.9
million after tax or $0.01 per diluted share) of expenses directly
related to our ASSA transaction, $0.8 million ($0.6 million after
tax) related to the compensation agreement with the former owner of
Solar, $10.9 million ($8.3 million after tax or $0.07 per diluted
share) of amortization of inventory step-up related to acquisition
of the ASSA businesses and the impact from actuarial gains
associated with our defined benefit plans of $2.4 million ($1.8
million after tax or $0.01 per diluted share).
For the thirty-nine weeks ended September 30, 2023, the diluted
EPS before charges/gains is calculated as income from continuing
operations on a diluted per-share basis, excluding $28.9 million
($22.0 million after tax or $0.17 per diluted share) of
restructuring charges, $12.8 million ($9.9 million after tax or
$0.08 per diluted share) of other charges/gains, $18.7 million
($14.3 million after tax or $0.11 per diluted share) of expenses
directly related to our ASSA transaction, $2.1 million ($1.6
million after tax or $0.01 per diluted share) related to the
compensation agreement with the former owner of Solar and $10.9
million ($8.3 million after tax or $0.07 per diluted share) of
amortization of inventory step-up related to acquisition of the
ASSA businesses and the impact from actuarial gains associated with
our defined benefit plans of $2.4 million ($1.8 million after tax
or $0.01 per diluted share).
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Earnings per common share (EPS) -
Diluted
Diluted EPS from continuing operations
(GAAP)
$
1.09
$
1.07
2
$
2.91
$
2.53
15
Restructuring charges
0.05
0.02
150
0.09
0.17
(47
)
Other charges/(gains)
0.02
0.03
(33
)
0.15
0.08
88
ASSA transaction expenses (d)
-
0.01
(100
)
-
0.11
(100
)
Solar compensation (e)
-
-
-
-
0.01
(100
)
Amortization of inventory step-up (f)
-
0.07
(100
)
-
0.07
(100
)
Defined benefit plan actuarial
(losses)/gains
-
(0.01
)
(100
)
-
(0.01
)
(100
)
Diluted EPS from continuing operations
before charges/gains (b)
$
1.16
$
1.19
(3
)
$
3.15
$
2.96
6
(b) (d) (e) (f) For definitions of Non-GAAP measures, see
Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
(In millions, except per share
amounts)
(Unaudited)
Thirteen Weeks Ended
Thirty-Nine Weeks
Ended
September 28, 2024
September 30, 2023
% Change
September 28, 2024
September 30, 2023
% Change
Net sales (GAAP)
Water
$
635.1
$
688.0
(8
)
$
1,920.0
$
1,899.2
1
Outdoors
342.7
366.4
(6
)
1,047.1
1,031.9
2
Security
177.5
206.8
(14
)
537.7
533.8
1
Total net sales
$
1,155.3
$
1,261.2
(8
)
$
3,504.8
$
3,464.9
1
Operating income (loss)
Water
$
151.4
$
164.2
(8
)
$
443.6
$
434.7
2
Outdoors
57.8
52.0
11
143.9
126.2
14
Security
33.0
17.0
94
86.5
37.8
129
Corporate expenses
(37.1
)
(36.7
)
1
(114.4
)
(117.7
)
(3
)
Total operating income (GAAP)
$
205.1
$
196.5
4
$
559.6
$
481.0
16
OPERATING INCOME
BEFORE CHARGES/GAINS RECONCILIATION
Total operating income (GAAP)
$
205.1
$
196.5
4
$
559.6
$
481.0
16
Restructuring charges (1)
7.4
3.7
100
14.1
28.9
(51
)
Other charges/(gains) (2)
3.5
6.8
(49
)
23.9
12.8
87
ASSA transaction expenses (d)
(0.1
)
1.2
(108
)
1.0
18.7
(95
)
Solar compensation (e)
-
0.8
(100
)
0.2
2.1
(90
)
Amortization of inventory step-up (f)
-
10.9
(100
)
0.3
10.9
(97
)
Operating income (loss) before
charges/gains (a)
$
215.9
$
219.9
(2
)
$
599.1
$
554.4
8
Water
$
156.4
$
166.3
(6
)
$
451.2
$
438.3
3
Outdoors
61.6
54.3
13
162.8
131.0
24
Security
34.3
34.7
(1
)
97.3
83.2
17
Corporate expenses
(36.4
)
(35.4
)
3
(112.2
)
(98.1
)
14
Total operating income before
charges/gains (a)
$
215.9
$
219.9
(2
)
$
599.1
$
554.4
8
(1)
Restructuring charges, which include costs
incurred for significant cost reduction initiatives and workforce
reduction costs by segment, totaled $7.4 million and $14.1 million
for the thirteen weeks ended and thirty-nine weeks ended September
28, 2024, respectively, and $3.7 million and $28.9 million for the
thirteen weeks ended and thirty-nine weeks ended September 30,
2023, respectively.
(2)
Other charges/gains represent costs that
are directly related to restructuring initiatives but cannot be
reported as restructuring costs under GAAP. These costs can include
losses from disposing of inventories, trade receivables allowances
from discontinued product lines, accelerated depreciation due to
the closure of facilities, and gains or losses from selling
previously closed facilities. During the thirteen weeks and
thirty-nine weeks ended September 28, 2024, total other charges
were $3.4 million and $25.4 million, respectively. For the thirteen
weeks and thirty-nine weeks ended September 30, 2023, total charges
were $19.7 million and $44.5 million, respectively.
(a) (d) (e) (f) For definitions of Non-GAAP measures, see
Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
OPERATING MARGIN TO OPERATING MARGIN
BEFORE CHARGES/GAINS
(Unaudited)
Thirteen Weeks Ended
September 28, 2024
September 30, 2023
Change
WATER
Operating margin
23.8%
23.9%
(10) bps
Restructuring charges
0.5%
-
Other charges/(gains)
Cost of products sold
0.3%
-
Amortization of inventory step-up (f)
-
0.3%
Operating margin before
charges/gains
24.6%
24.2%
40 bps
OUTDOORS
Operating margin
16.9%
14.2%
270 bps
Restructuring charges
0.7%
-
Other charges/(gains)
Cost of products sold
0.4%
0.4%
Solar compensation (e)
-
0.2%
Operating margin before
charges/gains
18.0%
14.8%
320 bps
SECURITY
Operating margin
18.6%
8.2%
1040 bps
Restructuring charges
0.5%
1.8%
Other charges/(gains)
Cost of products sold
0.3%
2.5%
Amortization of inventory step-up (f)
-
4.3%
Operating margin before
charges/gains
19.3%
16.8%
250 bps
TOTAL COMPANY
Operating margin
17.8%
15.6%
220 bps
Restructuring charges
0.6%
0.3%
Other charges/(gains)
Cost of products sold
0.3%
0.4%
Selling, general and administrative
expenses
-
-
Solar compensation (e)
-
0.1%
ASSA transaction expenses (d)
-
0.1%
Amortization of inventory step-up (f)
-
0.9%
Operating margin before
charges/gains
18.7%
17.4%
130 bps
Operating margin is calculated as the operating income in
accordance with GAAP, divided by the GAAP net sales. The operating
margin before charges/gains is calculated as the operating income,
excluding restructuring and other charges/gains, divided by the
GAAP net sales. The operating margin before charges/gains is not a
measure derived in accordance with GAAP. Management uses this
measure to evaluate the returns generated by the Company and its
business segments. Management believes that this measure provides
investors with helpful supplemental information about the Company's
underlying performance from period to period. However, this measure
may not be consistent with similar measures presented by other
companies.
(d) (e) (f) For definitions of Non-GAAP measures, see
Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
RECONCILIATION OF GAAP NET SALES TO
ORGANIC NET SALES EXCLUDING THE IMPACT OF ACQUISITIONS
(Unaudited)
Thirteen Weeks Ended
September 28, 2024
September 30, 2023
% Change
WATER
Net sales (GAAP)
$
635.1
$
688.0
(8%)
Impact of SpringWell Acquisition
5.5
-
Impact of Emtek and Schaub Acquisition
-
9.1
Organic net sales excluding impact of
acquisitions
$
629.6
$
678.9
(7%)
OUTDOORS
Net sales (GAAP)
$
342.7
$
366.4
(6%)
Organic net sales
$
342.7
$
366.4
(6%)
SECURITY
Net sales (GAAP)
$
177.5
$
206.8
(14%)
Impact of Yale and August Acquisition
-
5.6
Organic net sales excluding impact of
acquisition
$
177.5
$
201.2
(12%)
TOTAL COMPANY
Net sales (GAAP)
$
1,155.3
$
1,261.2
(8%)
Impact of SpringWell Acquisition
5.5
-
Impact of Emtek and Schaub Acquisition
-
9.1
Impact of Yale and August Acquisition
-
5.6
Organic net sales excluding impact of
acquisitions
$
1,149.8
$
1,246.5
(8%)
Reconciliation of GAAP net sales to organic net sales excluding
the impact of acquisitions on net sales is net sales derived in
accordance with GAAP excluding the impact of the acquisition of
SpringWell in our Water segment on net sales, and the impact of the
stub period revenue that was derived during the thirteen weeks
ended July 1, 2023 but recorded in the thirteen weeks ended
September 30, 2023, in accordance with GAAP, related to the
acquisition of Emtek and Schaub and Yale and August in our Water
and Security segments, respectively. Management uses this measure
to evaluate the overall performance of its segments and believes
this measure provides investors with helpful supplemental
information regarding the underlying performance of the segment
from period to period. This measure may be inconsistent with
similar measures presented by other companies.
FORTUNE BRANDS INNOVATIONS,
INC.
RECONCILIATION OF GAAP NET SALES TO
ORGANIC NET SALES EXCLUDING THE IMPACT OF ACQUISITIONS AND CHINA
SALES
(Unaudited)
Thirteen Weeks Ended September
28, 2024 vs Thirteen Weeks Ended September 30, 2023
% Change
Water
Percentage change in net sales
(GAAP)
(8%)
Impact of acquisitions
1%
Organic net sales excluding impact of
acquisitions
(7%)
Excluding China sales
5%
Organic net sales excluding impact of
acquisitions and China
(2%)
Thirteen Weeks Ended September
28, 2024 vs Thirteen Weeks Ended September 30, 2023
% Change
Total Company
Percentage change in net sales
(GAAP)
(8%)
Impact of acquisitions
(0%)
Organic net sales excluding impact of
acquisitions
(8%)
Excluding China sales
3%
Organic net sales excluding impact of
acquisitions and China
(5%)
Net sales excluding the impact of acquisitions and the impact of
China sales is net sales derived in accordance with GAAP excluding
impact of acquisitions and the impact of China sales. Management
uses this measure to evaluate the overall performance of its
segments and believes this measure provides investors with helpful
supplemental information regarding the underlying performance of
the segment from period to period. This measure may be inconsistent
with similar measures presented by other companies.
Definitions of Terms: Non-GAAP Measures
(a) Operating income (loss) before charges/gains is calculated
as operating income derived in accordance with GAAP, excluding
restructuring and other charges/gains. Operating income (loss)
before charges/gains is a measure not derived in accordance with
GAAP. Management uses this measure to evaluate the returns
generated by the Company and its business segments. Management
believes this measure provides investors with helpful supplemental
information regarding the underlying performance of the Company
from period to period. This measure may be inconsistent with
similar measures presented by other companies.
(b) Diluted earnings per share from continuing operations before
charges/gains is calculated as income from continuing operations on
a diluted per-share basis, excluding restructuring and other
charges/gains. This measure is not in accordance with GAAP.
Management uses this measure to evaluate the Company's overall
performance and believes it provides investors with helpful
supplemental information about the Company's underlying performance
from period to period. However, this measure may not be consistent
with similar measures presented by other companies.
(c) EBITDA before charges/gains is calculated as income from
continuing operations, net of tax in accordance with GAAP,
excluding depreciation, amortization of intangible assets,
restructuring and other charges/gains, interest expense and income
taxes. EBITDA before charges/gains is a measure not derived in
accordance with GAAP. Management uses this measure to assess
returns generated by the Company. Management believes this measure
provides investors with helpful supplemental information about the
Company's ability to fund internal growth, make acquisitions and
repay debt and related interest. This measure may be inconsistent
with similar measures presented by other companies.
(d) At Corporate, other charges also include expenditures of
$1.1 million for the thirteen weeks ended December 30, 2023, $1.2
million for the thirteen weeks ended September 30, 2023, and $18.7
million for the thirty-nine weeks ended September 30, 2023, for
external banking, legal, accounting, and other similar services
directly related to our ASSA transaction.
(e) In Outdoors, other charges include charges for compensation
arrangement with the former owner of Solar classified in selling,
general and administrative expenses of $0.6 million for the
thirteen weeks ended December 30, 2023, $0.8 million for the
thirteen weeks ended September 30, 2023, and $2.1 million for the
thirty-nine weeks ended September 30, 2023.
(f) For the thirteen weeks ended December 30, 2023, the
amortization of inventory step-up associated with the acquisition
of the ASSA business was $1.5 million for the Water segment. For
the thirteen and thirty-nine weeks ended September 30, 2023, the
amortization of inventory step-up associated with the ASSA
businesses was $2.0 million and $8.9 million for the Water and
Security segments, respectively.
(g) Asset impairment charges for the thirteen weeks ended
December 30, 2023 represent pre-tax impairment charges of $33.5
million related to indefinite-lived tradenames in our Outdoors
segment.
Additional Information:
For certain forward-looking non-GAAP measures (as used in this
press release, operating margin before charges/gains, EPS before
charges/gains and cash conversion), the Company is unable to
provide a reconciliation to the most comparable GAAP financial
measure because the information needed to reconcile these measures
is unavailable due to the inherent difficulty of forecasting the
timing and/or amount of various items that have not yet occurred,
including the high variability and low visibility with respect to
gains and losses associated with our defined benefit plans, which
are excluded from our diluted EPS before charges/gains and cash
conversion, and restructuring and other charges, which are excluded
from our operating margin before charges/gains, diluted EPS before
charges/gains and cash conversion. Additionally, estimating such
GAAP measures and providing a meaningful reconciliation consistent
with the Company’s accounting policies for future periods requires
a level of precision that is unavailable for these future periods
and cannot be accomplished without unreasonable effort.
Forward-looking non-GAAP measures are estimated consistent with the
relevant definitions and assumptions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106609422/en/
INVESTOR AND MEDIA CONTACT: Leigh Avsec 847-484-4211
Investor.Questions@fbin.com
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