Highlights:
- Q2 2024 sales were $1.2 billion, an increase of 7 percent
versus Q2 2023. Organic sales were $1.1 billion, a decrease of 3
percent versus Q2 2023
- Q2 2024 earnings per share (EPS) were $1.06, an increase of
33 percent versus a year ago; EPS before charges / gains were
$1.16, an increase of 8 percent versus Q2 2023
- Company announced a number of key milestones in its digital
products strategy
- Company updates full-year 2024 guidance, reflecting a
revised macro-economic outlook and strength in key businesses while
maintaining prior mid-point of EPS before charges / gains
range
Fortune Brands Innovations, Inc. (NYSE: FBIN or “Fortune Brands”
or the “Company”), an industry-leading innovation company focused
on creating smarter, safer and more beautiful homes and improving
lives, today announced second quarter 2024 results.
“Our teams continued to execute at a high level in a dynamic
market. We delivered solid second quarter sales as our core U.S.
products outperformed the market and we saw acceleration in our
digital products,” said Fortune Brands Chief Executive Officer
Nicholas Fink. “We also delivered strong operating margins, which
are a tangible result of our organizational realignment and the
other transformational actions we have taken over the past few
years.”
Fink continued, “Finally, we announced several significant
accelerants to our digital strategy, including with major insurance
providers, municipalities and technology partners. I am proud of
the continued investments and progress we have made, particularly
in an uneven and dynamic external environment.”
Second Quarter 2024
Results
($ in millions, except per share amounts)
Unaudited
Total Company Results
Reported Net Sales
Operating Income
Operating Margin
EPS
Q2 2024 GAAP
$1,240
$199.1
16.1%
$1.06
Change
7%
30%
300 bps
33%
Reported Net Sales
Operating Income Before
Charges / Gains
Operating Margin
Before Charges / Gains
EPS
Before Charges / Gains
Q2 2024 Non-GAAP
$1,240
$215.9
17.4%
$1.16
Change
7%
9%
40 bps
8%
Segment Results
Net Sales
Change
Operating Margin
Change
Operating Margin Before
Charges/Gains
Change
Reported
Organic
Reported
Organic
Water Innovations
$660
$586
7%
(5%)
22.9%
(10) bps
23.3%
10 bps
Outdoors
$389
$389
4%
4%
13.3%
(300) bps
16.3%
(10) bps
Security
$191
$159
12%
(7)%
18.0%
1,820 bps
18.9%
330 bps
Balance Sheet and Cash
Flow
The Company exited the quarter with a strong balance sheet, and
generated $262 million of operating cash flow and $223 million of
free cash flow in the quarter. In accordance with its
opportunistic, returns-based share repurchase program, the Company
repurchased $55 million of shares in the quarter, and as of July
25, 2024, has repurchased $190 million of shares year to date.
As of the end of the second quarter 2024:
Net debt
$2.5 billion
Net debt to EBITDA before charges
/ gains
2.6x
Cash
$353 million
Amount available under revolving
credit facility
$1,020 million
Updated 2024 Market and Financial
Guidance
“Amidst a dynamic market, we are now updating our full-year
guidance to reflect our expectations for continued out-performance
driven by our core businesses, with particular strength in our
Outdoors segment and our Moen North America business, and our
accelerating digital sales, which are offset by weaker China sales.
Importantly, we are narrowing the range around our prior EPS before
charges / gains mid-point due to expected growth in our core and
digital businesses and strong margin performance,” said Fortune
Brands Chief Financial Officer David Barry. “As we position Fortune
Brands for long-term shareholder value creation, we will continue
to prioritize above-market sales growth opportunities, margin
expansion and cash generation, while continuing to effectively
manage costs and invest in a strategic set of key priorities.”
Updated 2024 Full-Year Guidance
Initial 2024 Full-Year Guidance
Updated 2024 Full-Year Guidance
MARKET
Global market
-3% to flat
-3% to -1%
U.S. market
-2% to flat
-1% to flat
U.S. R&R
-4% to -2%
-4% to -3%
U.S. SFNC
5% to 7%
8% to 10%
China market
-9% to -7%
-20% to -15%
TOTAL COMPANY FINANCIAL METRICS
Net sales
3.5% to 5.5%
2.5% to 4.5%
Net sales [organic]
-1% to 1%
-2% to flat
Operating margin before charges /
gains
16.5% to 17.5%
17.0% to 17.5%
EPS before charges / gains
$4.20 to $4.40
$4.25 to $4.35
Cash flow from operations
Around $720 million
Around $700 million
Free cash flow
Around $520 million
Around $500 million
Cash conversion
Around 100%
Around 100%
SEGMENT FINANCIAL METRICS
Water Innovations net sales
3% to 5%
2.5% to 4.5%
Water Innovations net sales [organic]
-2% to flat
-4% to -2%
Water Innovations operating margin before
charges / gains
24% to 24.5%
Around 24%
Outdoors net sales
1% to 3%
2% to 4%
Outdoors operating margin before charges /
gains
13.5% to 14.5%
14.5% to 15.5%
Security net sales
10% to 12%
5% to 7%
Security net sales [organic]
Flat to 2%
-3% to -1%
Security operating margin before charges /
gains
15.5% to 16.5%
15.5% to 16.5%
OTHER ITEMS
Corporate expense
$140 million to $145 million
$143 million to $148 million
Interest expense
$118 million to $120 million
$122 million to $124 million
Other income / (expense)
Around $5 million
Around $5 million
Tax rate
23.25% to 23.5%
23.25% to 23.5%
Share count
Around 127 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. (NYSE: FBIN), headquartered in
Deerfield, Ill., is a brand, innovation and channel leader focused
on exciting, supercharged categories in the home products, security
and commercial building markets. The Company’s growing portfolio of
brands includes Moen, Flo, House of Rohl, Aqualisa, Emtek,
Therma-Tru, Larson, Fiberon, Master Lock, SentrySafe, Yale
residential and August. To learn more about FBIN, its brands and
environmental, social and governance (ESG) commitments, 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, 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" 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, (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), 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
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
Net sales (GAAP)
June 29, 2024
July 1, 2023
$ Change
% Change
June 29, 2024
July 1, 2023
$ Change
% Change
Water
$
659.6
$
617.1
$
42.5
7
$
1,284.9
$
1,211.3
$
73.6
6
Outdoors
389.4
375.6
13.8
4
704.4
665.5
38.9
6
Security
191.0
171.0
20.0
12
360.2
326.9
33.3
10
Total net sales
$
1,240.0
$
1,163.7
$
76.3
7
$
2,349.5
$
2,203.7
$
145.8
7
RECONCILIATIONS OF GAAP OPERATING
INCOME TO OPERATING INCOME BEFORE CHARGES/GAINS
(In millions)
(Unaudited)
Thirteen Weeks Ended
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
$ Change
% Change
June 29, 2024
July 1, 2023
$ Change
% Change
WATER
Operating income (GAAP)
$
150.9
$
142.1
$
8.8
6
$
292.2
$
270.5
$
21.7
8
Restructuring charges
1.1
1.1
-
-
1.6
1.3
0.3
23
Other charges/(gains)
Cost of products sold
1.4
-
1.4
100
1.1
0.1
1.0
1,000
Operating income before charges/gains
(a)
$
153.4
$
143.2
$
10.2
7
$
294.9
$
271.9
$
23.0
8
OUTDOORS
Operating income (GAAP)
$
51.8
$
61.2
$
(9.4
)
(15
)
$
86.0
$
74.2
$
11.8
16
Restructuring charges
2.1
1.5
0.6
40
2.5
3.0
(0.5
)
(17
)
Other charges/(gains)
Cost of products sold
9.4
(1.7
)
11.1
(653
)
12.4
(1.7
)
14.1
(829
)
Selling, general and administrative
expenses
-
-
-
-
0.2
-
0.2
100
Solar compensation (e)
-
0.6
(0.6
)
(100
)
-
1.3
(1.3
)
(100
)
Operating income before charges/gains
(a)
63.3
61.6
$
1.7
3
101.1
76.8
$
24.3
32
SECURITY
Operating income (GAAP)
$
34.4
$
(0.4
)
$
34.8
(8,700
)
$
53.5
$
20.8
$
32.7
157
Restructuring charges
0.6
19.6
(19.0
)
(97
)
2.2
20.2
(18.0
)
(89
)
Other charges/(gains)
Cost of products sold
1.2
7.4
(6.2
)
(84
)
7.2
7.5
(0.3
)
(4
)
Operating income before charges/gains
(a)
$
36.2
$
26.6
$
9.6
36
$
62.9
$
48.5
$
14.4
30
CORPORATE
Corporate expense (GAAP)
$
(38.0
)
$
(50.3
)
$
12.3
(24
)
$
(77.2
)
$
(81.1
)
$
3.9
(5
)
Restructuring charges
0.1
-
0.1
100
0.4
0.7
(0.3
)
(43
)
Other charges/(gains)
Selling, general and administrative
expenses
0.9
0.3
0.6
200
1.1
0.3
0.8
267
ASSA transaction expenses (d)
-
16.4
(16.4
)
(100
)
-
17.4
(17.4
)
(100
)
General and administrative expenses
before charges/gains (a)
$
(37.0
)
$
(33.6
)
$
(3.4
)
10
$
(75.7
)
$
(62.7
)
$
(13.0
)
21
TOTAL COMPANY
Operating income (GAAP)
$
199.1
$
152.6
$
46.5
30
$
354.5
$
284.4
$
70.1
25
Restructuring charges
3.9
22.2
(18.3
)
(82
)
6.7
25.2
(18.5
)
(73
)
Other charges/(gains)
Cost of products sold
12.0
5.7
6.3
111
20.7
5.9
14.8
251
Selling, general and administrative
expenses
0.9
0.3
0.6
200
1.3
0.3
1.0
333
ASSA transaction expenses (d)
-
16.4
(16.4
)
(100
)
-
17.4
(17.4
)
(100
)
Solar compensation (e)
-
0.6
(0.6
)
(100
)
-
1.3
(1.3
)
(100
)
Operating income before charges/gains
(a)
$
215.9
$
197.8
$
18.1
9
$
383.2
$
334.5
$
48.7
15
The Yale/August and Emtek/Schaub
acquisition net sales, operating income and cash flows from the
date of acquisition to July 1, 2023 were not material to the
Company.
(a) (d) (e) For definitions of Non-GAAP
measures, see Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (GAAP)
(In millions)
(Unaudited)
June 29, 2024
December 30, 2023
Assets
Current assets
Cash and cash equivalents
$
352.6
$
366.4
Accounts receivable, net
593.6
534.2
Inventories
990.5
982.3
Other current assets
145.2
162.8
Total current assets
2,081.9
2,045.7
Property, plant and equipment, net
976.6
975.0
Goodwill
1,994.8
1,906.8
Other intangible assets, net of
accumulated amortization
1,336.2
1,354.7
Other assets
284.4
282.8
Total assets
$
6,673.9
$
6,565.0
Liabilities and equity
Current liabilities
Short-term debt
$
499.3
$
-
Accounts payable
554.4
568.1
Other current liabilities
494.3
632.3
Total current liabilities
1,548.0
1,200.4
Long-term debt
2,401.7
2,670.1
Deferred income taxes
120.6
111.3
Other non-current liabilities
273.0
289.8
Total liabilities
4,343.3
4,271.6
Stockholders' equity
2,330.6
2,293.4
Total equity
2,330.6
2,293.4
Total liabilities and equity
$
6,673.9
$
6,565.0
FORTUNE BRANDS INNOVATIONS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
Operating activities
Net income
$
230.2
$
186.7
Depreciation and amortization
101.5
66.1
Non-cash lease expense
19.3
15.8
Deferred taxes
11.8
(1.0
)
Other non-cash items
19.7
16.7
Changes in assets and liabilities, net
(192.3
)
219.3
Net cash provided by operating
activities
$
190.2
$
503.6
Investing activities
Capital expenditures
$
(103.4
)
$
(112.2
)
Proceeds from the disposition of
assets
5.7
2.7
Cost of acquisitions, net of cash
acquired
(129.0
)
(781.8
)
Other investing activities, net
(3.5
)
-
Net cash used in investing
activities
$
(230.2
)
$
(891.3
)
Financing activities
Increase in debt, net
$
230.0
$
595.1
Proceeds from the exercise of stock
options
7.1
5.0
Treasury stock purchases
(150.2
)
(100.0
)
Dividends to stockholders
(60.2
)
(58.6
)
Other items, net
(17.0
)
(13.7
)
Net cash provided by financing
activities
$
9.7
$
427.8
Effect of foreign exchange rate changes on
cash
$
(7.7
)
$
(2.1
)
Net increase (decrease) in cash and cash
equivalents
$
(38.0
)
$
38.0
Cash, cash equivalents and restricted
cash* at beginning of period
395.5
648.3
Cash, cash equivalents and restricted
cash* at end of period
$
357.5
$
686.3
FREE CASH
FLOW
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
2024 Full Year
June 29, 2024
July 1, 2023
Estimate
Cash flow from operations
(GAAP)
$
190.2
$
503.6
$
700.0
Less:
Capital expenditures
$
103.4
$
112.2
$
200.0
Free cash flow**
$
86.8
$
391.4
$
500.0
*Restricted cash of $2.5 million and $2.4
million is included in Other current assets and Other assets,
respectively, as of June 29, 2024. Restricted cash of $2.3 million
and $2.3 million is included in Other current assets and Other
assets, respectively, as of July 1, 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
June 29, 2024
Cash flow from operations
(GAAP)
$
261.5
Less:
Capital expenditures
38.8
Free cash flow*
$
222.7
* 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
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Net sales
$
1,240.0
$
1,163.7
7
$
2,349.5
$
2,203.7
7
Cost of products sold
699.0
695.6
-
1,320.9
1,327.2
-
Selling, general
and administrative expenses
319.7
280.7
14
631.3
541.7
17
Amortization of intangible assets
18.3
12.6
45
36.1
25.2
43
Restructuring charges
3.9
22.2
(82
)
6.7
25.2
(73
)
Operating income
199.1
152.6
30
354.5
284.4
25
Interest expense
32.3
27.7
17
62.4
54.6
14
Other (income)/expense, net
(3.7
)
(5.2
)
(29
)
(3.6
)
(11.6
)
(69
)
Income from continuing operations
before income taxes
170.5
130.1
31
295.7
241.4
22
Income tax
36.6
28.0
31
65.5
53.7
22
Income from continuing operations, net
of tax
$
133.9
$
102.1
31
$
230.2
$
187.7
23
(Loss) income from discontinued
operations, net of tax
-
-
-
-
(1.0
)
(100
)
Net income
$
133.9
$
102.1
31
$
230.2
$
186.7
23
Net income attributable to Fortune
Brands
$
133.9
$
102.1
31
$
230.2
$
186.7
23
Diluted earnings per common
share
Continuing operations
$
1.06
$
0.80
33
$
1.82
$
1.47
24
Discontinued operations
$
-
$
-
-
$
-
$
(0.01
)
(100
)
Diluted EPS attributable to Fortune
Brands
$
1.06
$
0.80
33
$
1.82
$
1.46
24
Diluted average number of shares
outstanding
125.8
127.5
(1
)
126.4
128.0
(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
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Income from continuing operations, net
of tax
$
133.9
$
102.1
31
$
230.2
$
187.7
23
Depreciation *
$
26.2
$
19.5
34
$
46.9
$
38.7
21
Amortization of intangible assets
18.3
12.6
45
36.1
25.2
43
Restructuring charges
3.9
22.2
(82
)
6.7
25.2
(73
)
Other charges/(gains)
12.9
6.0
115
22.0
6.2
255
ASSA transaction expenses (d)
-
16.4
(100
)
-
17.4
(100
)
Solar compensation (e)
-
0.6
(100
)
-
1.3
(100
)
Interest expense
32.3
27.7
17
62.4
54.6
14
Income taxes
36.6
28.0
31
65.5
53.7
22
EBITDA before charges/gains (c)
$
264.1
$
235.1
12
$
469.8
$
410.0
15
* Depreciation excludes accelerated
depreciation expense of $10.9 million for the thirteen weeks ended
June 29, 2024, and $18.5 million for the twenty-six weeks ended
June 29, 2024 and excludes accelerated depreciation expense of $2.1
million for the thirteen weeks ended July 1, 2023, and $2.2 million
for the twenty-six weeks ended July 1, 2023. Accelerated
depreciation is included in other charges/gains.
CALCULATION OF NET DEBT-TO-EBITDA
BEFORE CHARGES/GAINS RATIO
As of June 29, 2024
Short-term debt **
$
499.3
Long-term debt **
2,401.7
Total debt
2,901.0
Less:
Cash and cash equivalents **
352.6
Net debt (1)
$
2,548.4
For the twelve months ended June 29,
2024
EBITDA before charges/gains (2) (c)
$
969.5
Net debt-to-EBITDA before charges/gains
ratio (1/2)
2.6
** Amounts are per the Unaudited Condensed
Consolidated Balance Sheet as of June 29, 2024.
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
Fifty-Two Weeks Ended
December 30, 2023
June 29, 2024
June 29, 2024
Income from continuing operations, net
of tax
$
217.8
$
230.2
$
448.0
Depreciation***
$
51.8
$
46.9
$
98.7
Amortization of intangible assets
36.9
36.1
73.0
Restructuring charges
7.3
6.7
14.0
Other charges/(gains)
16.1
22.0
38.1
ASSA transaction expenses (d)
2.3
-
2.3
Solar compensation (e)
1.4
-
1.4
Amortization of inventory step-up (f)
12.4
-
12.4
Interest expense
62.0
62.4
124.4
Asset impairment charge (g)
33.5
-
33.5
Defined benefit plan actuarial gains
(0.5
)
-
(0.5
)
Income taxes
58.7
65.5
124.2
EBITDA before charges/gains (c)
$
499.7
$
469.8
$
969.5
*** Depreciation excludes accelerated
depreciation expense of $18.5 million for the twenty-six weeks
ended June 29, 2024, and $14.1 million for the twenty-six 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 June 29,
2024, the diluted EPS before charges/gains is calculated as income
from continuing operations on a diluted per-share basis, excluding
$3.9 million ($3.0 million after tax or $0.02 per diluted share) of
restructuring charges and $12.9 million ($9.8 million after tax or
$0.08 per diluted share) of other charges/gains.
For the twenty-six weeks ended June 29,
2024, the diluted EPS before charges/gains is calculated as income
from continuing operations on a diluted per-share basis, excluding
$6.7 million ($5.1 million after tax or $0.04 per diluted share) of
restructuring charges and $22.0 million ($16.7 million after tax or
$0.13 per diluted share) of other charges/gains.
For the thirteen weeks ended July 1, 2023,
the diluted EPS before charges/gains is calculated as income from
continuing operations on a diluted per-share basis, excluding $22.2
million ($16.9 million after tax or $0.13 per diluted share) of
restructuring charges, $6.0 million ($4.6 million after tax or
$0.04 per diluted share) of other charges/gains, $16.4 million
($12.6 million after tax or $0.10 per diluted share) of expenses
directly related to our ASSA transaction and $0.6 million ($0.5
million after tax) related to the compensation agreement with the
former owner of Solar.
For the twenty-six weeks ended July 1,
2023, the diluted EPS before charges/gains is calculated as income
from continuing operations on a diluted per-share basis, excluding
$25.2 million ($19.2 million after tax or $0.15 per diluted share)
of restructuring charges, $6.2 million ($4.6 million after tax or
$0.03 per diluted share) of other charges/gains, $17.4 million
($13.4 million after tax or $0.10 per diluted share) of expenses
directly related to our ASSA transaction and $1.3 million ($1.0
million after tax or $0.01 per diluted share) related to the
compensation agreement with the former owner of Solar.
Thirteen Weeks Ended
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Earnings per common share (EPS) -
Diluted
Diluted EPS from continuing operations
(GAAP)
$
1.06
$
0.80
33
$
1.82
$
1.47
24
Restructuring charges
0.02
0.13
(85
)
0.04
0.15
(73
)
Other charges/(gains)
0.08
0.04
100
0.13
0.03
333
ASSA transaction expenses (d)
-
0.10
(100
)
-
0.10
(100
)
Solar compensation (e)
-
-
-
-
0.01
(100
)
Diluted EPS from continuing operations
before charges/gains (b)
$
1.16
$
1.07
8
$
1.99
$
1.76
13
(d) (e) 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
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
% Change
June 29, 2024
July 1, 2023
% Change
Net sales (GAAP)
Water
$
659.6
$
617.1
7
$
1,284.9
$
1,211.3
6
Outdoors
389.4
375.6
4
704.4
665.5
6
Security
191.0
171.0
12
360.2
326.9
10
Total net sales
$
1,240.0
$
1,163.7
7
$
2,349.5
$
2,203.7
7
Operating income (loss)
Water
$
150.9
$
142.1
6
$
292.2
$
270.5
8
Outdoors
51.8
61.2
(15
)
86.0
74.2
16
Security
34.4
(0.4
)
100
53.5
20.8
157
Corporate expenses
(38.0
)
(50.3
)
(24
)
(77.2
)
(81.1
)
(5
)
Total operating income (GAAP)
$
199.1
$
152.6
30
$
354.5
$
284.4
25
OPERATING INCOME
BEFORE CHARGES/GAINS RECONCILIATION
Total operating income (GAAP)
$
199.1
$
152.6
30
$
354.5
$
284.4
25
Restructuring charges (1)
3.9
22.2
(82
)
6.7
25.2
(73
)
Other charges/(gains) (2)
12.9
6.0
115
22.0
6.2
255
ASSA transaction expenses (d)
-
16.4
(100
)
-
17.4
(100
)
Solar compensation (e)
-
0.6
(100
)
-
1.3
(100
)
Operating income (loss) before
charges/gains (a)
$
215.9
$
197.8
9
$
383.2
$
334.5
15
Water
$
153.4
$
143.2
7
$
294.9
$
271.9
8
Outdoors
63.3
61.6
3
101.1
76.8
32
Security
36.2
26.6
36
62.9
48.5
30
Corporate expenses
(37.0
)
(33.6
)
10
(75.7
)
(62.7
)
21
Total operating income before
charges/gains (a)
$
215.9
$
197.8
9
$
383.2
$
334.5
15
(1)
Restructuring charges, which include costs
incurred for significant cost reduction initiatives and workforce
reduction costs by segment, totaled $3.9 million and $6.7 million
for the thirteen weeks ended and twenty-six weeks ended June 29,
2024, respectively, and $22.2 million and $25.2 million for the
thirteen weeks ended and twenty-six weeks ended July 1, 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
twenty-six weeks ended June 29, 2024, total other charges were
$12.9 million and $22.0 million, respectively. For the thirteen
weeks and twenty-six weeks ended July 1, 2023, total charges were
$6.0 million and $6.2 million, respectively.
(a) (d) (e) For definitions of Non-GAAP
measures, see Definitions of Terms page
FORTUNE BRANDS INNOVATIONS,
INC.
OPERATING MARGIN TO BEFORE
CHARGES/GAINS OPERATING MARGIN
(Unaudited)
Thirteen Weeks Ended
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
June 29, 2024
July 1, 2023
Change
June 29, 2024
July 1, 2023
Change
WATER
Operating margin
22.9%
23.0%
(10) bps
22.7%
22.3%
40 bps
Restructuring charges
0.2%
0.2%
(0.2%)
(0.2%)
Other charges/(gains)
Cost of products sold
0.2%
-
(0.1%)
-
Before charges/gains operating
margin
23.3%
23.2%
10 bps
23.0%
22.5%
50 bps
OUTDOORS
Operating margin
13.3%
16.3%
(300) bps
12.2%
11.1%
110 bps
Restructuring charges
0.5%
0.4%
(0.4%)
(0.5%)
Other charges/(gains)
Cost of products sold
2.5%
(0.5%)
(1.8%)
0.3%
Solar compensation (e)
-
0.2%
-
(0.2%)
Before charges/gains operating
margin
16.3%
16.4%
(10) bps
14.4%
11.5%
290 bps
SECURITY
Operating margin
18.0%
(0.2%)
1,820 bps
14.9%
6.4%
850 bps
Restructuring charges
0.3%
11.5%
(0.6%)
(6.1%)
Other charges/(gains)
Cost of products sold
0.6%
4.3%
(2.0%)
(2.3%)
Before charges/gains operating
margin
18.9%
15.6%
330 bps
17.5%
14.8%
270 bps
TOTAL COMPANY
Operating margin
16.1%
13.1%
300 bps
15.1%
12.9%
220 bps
Restructuring charges
0.3%
1.9%
(0.3%)
(1.1%)
Other charges/(gains)
Cost of products sold
0.9%
0.5%
(0.8%)
(0.3%)
Selling, general and administrative
expenses
0.1%
-
(0.1%)
-
ASSA transaction expenses (d)
-
1.4%
-
(0.8%)
Solar compensation (e)
-
0.1%
-
(0.1%)
Before charges/gains operating
margin
17.4%
17.0%
40 bps
16.3%
15.2%
110 bps
Operating margin is calculated as the
operating income in accordance with GAAP, divided by the GAAP net
sales. The before charges/gains operating margin is calculated as
the operating income, excluding restructuring and other
charges/gains, divided by the GAAP net sales. This before
charges/gains operating margin 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) 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
Thirteen Weeks Ended
June 29, 2024
July 1, 2023
% Change
WATER
Net sales (GAAP)
$
659.6
$
617.1
7%
Impact of SpringWell Acquisition
6.9
-
Impact of Emtek and Schaub Acquisition
67.1
-
Organic net sales excluding impact of
acquisitions
$
585.6
$
617.1
(5%)
OUTDOORS
Net sales (GAAP)
$
389.4
$
375.6
4%
Organic net sales
$
389.4
$
375.6
4%
SECURITY
Net sales (GAAP)
$
191.0
$
171.0
12%
Impact of Yale and August Acquisition
32.2
-
Organic net sales excluding impact of
acquisition
$
158.8
$
171.0
(7%)
TOTAL COMPANY
Net sales (GAAP)
$
1,240.0
$
1,163.7
7%
Impact of SpringWell Acquisition
6.9
-
Impact of Emtek and Schaub Acquisition
67.1
-
Impact of Yale and August Acquisition
32.2
-
Organic net sales excluding impact of
acquisitions
$
1,133.8
$
1,163.7
(3%)
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 impact of
the acquisitions of SpringWell and Emtek and Schaub in our Water
segment and the acquisition of Yale and August in our Security
segment on net 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 $2.3 million for the twenty-six weeks ended
December 30, 2023, $16.4 million for the thirteen weeks ended July
1, 2023, and $17.4 million for the twenty-six weeks ended July 1,
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 $1.4
million for the twenty-six weeks ended December 30, 2023, $0.6
million for the thirteen weeks ended July 1,2023, and $1.3 million
for the twenty-six weeks ended July 1, 2023.
(f) For the twenty-six weeks ended
December 30, 2023, the amortization of inventory step-up associated
with the acquisition of the ASSA business was $3.5 million for the
Water segment and $8.9 million for the Security segment.
(g) Asset impairment charges for the twenty-six 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:
In January 2023, the Board of Directors of
the Company approved a change to the Company’s fiscal year end from
December 31 to a 52-or 53-week fiscal year ending on the Saturday
closest but not subsequent to December 31, effective as of the
commencement of the Company’s fiscal year on January 1, 2023. This
change was made in order to align the Company’s fiscal year with
that of its operating businesses and to align the Company’s
reporting calendar with how the Company evaluates its businesses.
There was no material impact to any of our previously disclosed
financial 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/20240725227297/en/
INVESTOR AND MEDIA CONTACT: Leigh Avsec 847-484-4211
Investor.Questions@fbin.com
Grafico Azioni Fortune Brands Innovations (NYSE:FBIN)
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