Fortune Brands Delivers Strong Sales and Profit Growth in 2Q 2021
Fortune Brands Home & Security, Inc. (the “Company”, or “Fortune Brands”), an industry-leading home and security products company, announced second quarter 2021 results.
Highlights From Operations:
– 2Q 2021 sales increased 41 percent to $1.9 billion year-over-year
– 2Q 2021 earnings per share (“EPS”) increased 87 percent to $1.55 per share versus the prior-year-quarter; EPS before charges / gains increased 66 percent year-over-year to $1.56
– Strong operational performance produced margin expansion sequentially and versus a year ago
– Company increases 2021 full year financial outlook on continued share gains in a strong demand environment
“Our exceptional top and bottom-line results were once again driven by our teams’ outperformance,” said Nicholas Fink, chief executive officer, Fortune Brands. “We continue to delight consumers, serve our customers, and are being rewarded with above-market growth. We delivered share gains and increased profitability, both sequentially and year-over-year. Our Fortune Brands Advantage initiatives are working to offset inflation and supply chain headwinds while also delivering incremental investment funds to support our most critical growth priorities. Long-term fundamentals are solidly intact as the industry works to address years of underbuilding in our key U.S. market. Our execution in this strong housing market has enabled us to raise our outlook for the year. While inflation and supply chain headwinds will persist through the second half of the year, we are on track to deliver on our growth and margin objectives. We remain focused on our strategic priorities and intend to continue to outperform in any environment.”
Second Quarter 2021
For the second quarter of 2021, sales were $1.9 billion, an increase of 41 percent over the second quarter of 2020. Earnings per share were $1.55, compared to $0.83 in the prior-year quarter. EPS before charges / gains were $1.56, compared to $0.94 in the prior-year quarter, an increase of 66 percent. Operating income was $294.9 million, compared to $173.0 million in the prior-year quarter. Operating income before charges / gains was $297.5 million, compared to $196.7 million in the prior-year quarter, up 51 percent. Operating margin was 15.2 percent, compared to 12.6 percent in the second quarter of 2020. Operating margin before charges / gains was 15.4 percent, up 110 basis points over the second quarter of 2020.
For each segment in the second quarter of 2021, compared to the prior-year quarter:
– Plumbing sales increased approximately 38 percent, or 33 percent excluding FX, the result of strong performance across the business. Operating margin before charges / gains was especially strong at 24.3 percent.
– Outdoors & Security sales increased approximately 61 percent, driven by the addition of LARSON and double-digit sales growth of composite decking, doors, and security. Excluding LARSON, organic sales increased 26 percent. Operating margin before charges / gains was 14.7 percent, an increase of 30 basis points.
– Cabinet sales increased 31 percent, driven by strong growth across all price points. Operating margin before charges / gains was 10.9 percent, an increase of 270 basis points versus the prior year.
Balance Sheet, Liquidity and Share Repurchase Authorization
At the end of the quarter, net debt was $2.1 billion and net debt to EBITDA was 1.7x. The Company had $460 million in cash and $430 million of availability under its revolving credit facility.
Year-to-date through June 30, 2021, the Company has purchased $156 million of its shares outstanding.
On July 26, 2021, the Company announced that its Board of Directors authorized the further repurchase of up to $400 million of shares of the Company’s common stock over the next two years on the open market or in privately negotiated transactions in accordance with applicable securities laws.
Update to Annual Outlook for 2021
The Company expects to continue outperforming a fundamentally strong housing market. The Company now anticipates delivering full-year sales growth in the range of 23 percent to 25 percent, or 16 percent to 18 percent excluding the LARSON acquisition. This reflects the Company’s revised assumptions of a global home products market now expanding by 10 percent to 12 percent, including growth in the U.S. home products market of approximately 11 percent to 13 percent.
The Company now expects EPS before charges / gains for the full year to be in the range of $5.65 to $5.85, representing an increase at the midpoint of 37 percent versus a year ago.
For 2021, the Company expects to generate free cash flow of approximately $675 to $725 million.
“The market for our brands remains very strong,” said Patrick Hallinan, chief financial officer, Fortune Brands. “We have increased our market forecast and coupled with our excellent execution in a challenging external environment, we are again raising our 2021 financial outlook. We are solidly on track to deliver our 2021 and longer-term financial objectives, while continuing to invest for growth. Further, we are also positioned to deploy capital to increase stakeholder value.”
For the full second 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’ 27,500 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.