Fortune Brands Reports Strong Sales and Profit Growth in 4Q and Full Year 2020
Fortune Brands Home & Security, Inc. (the “Company”, or “Fortune Brands”), an industry-leading home and security products company, today announced fourth quarter and full-year 2020 results.
“Strong fourth quarter results capped a remarkable 2020 performance by our teams,” said Nicholas Fink, chief executive officer, Fortune Brands. “Facing unprecedented challenges, we delivered above-market growth and margin acceleration and positioned our Company to continue to deliver share gains and margin improvement in 2021 and beyond. This past year demonstrated that our leading brands and channel positions and differentiated business model produce exceptional results in a variety of demand environments. Importantly, our teams’ ability to execute and remain nimble allows us to capitalize on an increasing set of growth and margin opportunities. Our tireless commitment to serving our customers, keeping people safe and our overall culture of excellence has driven our results. Moving forward, we are well positioned to leverage our Fortune Brands advantaged capabilities across our portfolio to create even more value for all stakeholders.”
Fourth Quarter 2020
For the fourth quarter of 2020, sales were $1.7 billion, an increase of 13 percent over the fourth quarter of 2019. Earnings per share were $1.16, compared to $0.74 in the prior-year quarter. EPS before charges / gains were $1.25, compared to $1.00 the same quarter last year, an increase of 25 percent. Operating income was $233.2 million, compared to $192.5 million in the prior-year quarter. Operating income before charges / gains was $246.4 million, compared to $206.8 million the same quarter last year, up 19 percent. Operating margin was 14.1 percent, compared to 13.1 percent in the fourth quarter of 2019. Operating margin before charges / gains was 14.8 percent, up 70 basis points over the fourth quarter of 2019.
For each segment in the fourth quarter of 2020, compared to the prior-year quarter:
– Plumbing sales increased 16 percent, or 15 percent excluding FX, led by strong performance across the business. Operating margin before charges / gains remained strong at 21.8 percent.
– Cabinet sales increased 11 percent, driven by growth across products at all price points. Operating margin before charges / gains was 11.6 percent, an increase of 150 basis points.
– Outdoors & Security sales increased 11 percent, driven by strong double-digit sales growth of composite decking and doors. Operating margin before charges / gains was 15.8 percent, an increase of 90 basis points.
Full Year 2020
For the full year 2020, sales were approximately $6.1 billion, an increase of approximately 6 percent over 2019. Earnings per share were $3.94 compared to $3.06 in the prior year, and EPS before charges / gains were $4.19 versus $3.60 last year, an increase of 16 percent. Operating income was $801.4 million, compared to $698.5 million in the prior year. Operating income before charges / gains was $857.1 million, compared to $764.0 million during the previous year, up 12 percent. Operating margin was 13.2 percent, compared to 12.1 percent in 2019. Operating margin before charges / gains was 14.1 percent, up 80 basis points over full year 2019.
“We have used the challenges presented by 2020 to improve the focus and productivity of our business, positioning it for accelerated growth and profitability going forward,” stated Patrick Hallinan, chief financial officer, Fortune Brands. “The efficiency programs undertaken in 2020 have put us ahead of our margin improvement timeline, and we expect to continue toward our goals during 2021. While there may be instances of macro uncertainty and cost inflation in the year ahead, these challenges have been anticipated, and we expect to manage them effectively – as we have in 2020 and in preceding years. We expect another year of strong free cash flow generation in 2021. In 2020, we deployed over $1 billion in M&A, share repurchases, and dividends. We remain laser-focused on driving further value by deploying capital to drive organic growth, M&A, strategic partnerships, and returning excess capital to shareholders.”
On November 17, 2020, the Company announced it was acquiring LARSON Manufacturing (“LARSON”), the North American market leading brand of storm, screen and security doors for approximately $660 million, net of expected tax benefits but before closing adjustments. On December 14, 2020, the transaction was closed, and LARSON officially joined the Outdoors & Security segment.
Balance Sheet and Liquidity
At the end of the quarter, net debt was $2.2 billion and net debt to EBITDA was 2.1x. The Company had $419 million in cash and $865 million of availability under its revolving credit agreements. The total outstanding on both the Company’s original $1.25 billion and supplemental $400 million revolving credit facilities was approximately $785 million at the end of the fourth quarter.
Annual Outlook for 2021
The Company expects full-year 2021 sales growth in the range of 12.5 percent to 14.5 percent, or 5.5 percent to 7.5 percent excluding the LARSON acquisition, based on the Company’s assumption of a total global market expanding by 5 percent to 7 percent, including growth in the U.S. home products market of approximately 5 percent to 7 percent.
The Company expects EPS before charges / gains to be in the range of $4.85 to $5.05.
For 2021, the Company expects to generate free cash flow of approximately $600 to $650 million.
“Our key housing markets are entering a period of long-term expansion,” said Fink. “The current environment has accelerated trends already in place prior to the pandemic and there is renewed consumer focus on the value and role of the home. Our consumers desire larger, multifunctional spaces to combine work, education, and entertainment within the home as well as expanded outdoor living spaces. Demographic forces, combined with very healthy homeowner balance sheets, are driving accelerated activity in the housing industry. Our innovation, leading brands, and premier channel positions, across new construction and repair & remodel, are creating significant opportunities and value for our Company and our stakeholders. With our excellent momentum, strong balance sheet, and advantaged Fortune Brands capabilities, we are very excited about the opportunity to accelerate stakeholder value creation in 2021 and beyond.”
For the full fourth quarter results, click here.
About Fortune Brands
Fortune Brands Home & Security, Inc. (NYSE: FBHS), headquartered in Deerfield, IL., is a Fortune 500 company, part of the S&P 500 Index and a leader in the home products industry. With trusted brands and market leadership positions in each of its three operating segments, Plumbing, Outdoors & Security, and Cabinets, Fortune Brands’ 27,000 associates work with a purpose to fulfill the dreams of home. The Company’s growing portfolio of complementary businesses and innovative brands include Moen and the House of Rohl within the Global Plumbing Group; outdoor living and security products from Therma-Tru, LARSON, Fiberon, Master Lock and SentrySafe; and MasterBrand Cabinets’ wide-ranging offerings from Mantra, Diamond, Omega and many more. Visit www.FBHS.com to learn more about FBHS, its brands and how the Company is accelerating its environmental, social and governance (ESG) commitments.
Matthew Skelly – Investor & Media Contact – firstname.lastname@example.org – (847) 484-4573
Source: Fortune Brands Home & Security, Inc.