Fortune Brands Reports Strong Sales and Profit Growth in 3Q 2021
Fortune Brands Home & Security, Inc. (the “Company”, or “Fortune Brands”), an industry-leading home and security products company, announced third quarter 2021 results.
Highlights from operations:
-3Q 2021 sales increased 20 percent year-over-year and approached $2.0 billion
-3Q 2021 earnings per share (EPS) increased 24 percent to $1.45 per share versus the prior-year-quarter; EPS before charges / gains increased 25 percent year-over-year to $1.49
-Company on track to deliver both record performance in 2021 and long-term growth and margin targets
-Company revising 2021 full year financial outlook to reflect near-term supply chain and labor availability challenges
“Our teams produced very strong results in an extremely challenging environment,” said Nicholas Fink, chief executive officer, Fortune Brands. “Demand remains strong across our portfolio and our investments in innovation, capacity, and digital transformation continue to accelerate the value proposition behind our world-class brands. While supply chain and labor availability headwinds have increased, we are addressing these challenges head-on. We continue to develop and deploy our Fortune Brands Advantage capabilities to further reduce complexity and increase our efficiencies in global sourcing. These actions will help offset these near-term headwinds while also increasing our ability to invest further. The steps we are taking position the Company for continued outperformance and will contribute to achieving our long-term goals in this elongating and expanding housing market.”
Third Quarter 2021
For the third quarter of 2021, sales approached $2.0 billion, an increase of 20 percent over the third quarter of 2020. Earnings per share were $1.45, compared to $1.17 in the prior-year quarter. EPS before charges / gains were $1.49, compared to $1.19 in the prior-year quarter, an increase of 25 percent. Operating income was $286.6 million, compared to $240.2 million in the prior-year quarter. Operating income before charges / gains was $293.3 million, compared to $244.2 million in the prior-year quarter, up 20 percent. Operating margin was 14.4 percent, compared to 14.5 percent in the third quarter of 2020. Operating margin before charges / gains was 14.8 percent, even versus the third quarter of 2020.
For each segment in the third quarter of 2021, compared to the prior-year quarter:
-Plumbing sales increased approximately 26 percent, or 23 percent excluding FX, the result of strong performance across the business. Operating margin before charges / gains was 22.6 percent.
-Outdoors & Security sales increased approximately 30 percent, driven by the addition of LARSON and organic growth of 6 percent. Operating margin before charges / gains was 15.6 percent.
-Cabinets sales increased by over 9 percent, driven by strong growth across all price points. Operating margin before charges / gains was 9.7 percent.
Balance Sheet, Liquidity and Share Repurchase Authorization
At the end of the quarter, net debt was $2.2 billion and net debt to EBITDA was 1.7x. The Company had $461 million in cash and $410 million of availability under its revolving credit facility.
During the third quarter, the Company repurchased $114 million in common stock and as of October 26, 2021, has repurchased over $380 million in common stock during 2021.
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 24.5 percent to 25.5 percent, or 17.5 percent to 18.5 percent excluding the LARSON acquisition. This reflects the Company’s revised assumptions of a global home products market now expanding by approximately 11 percent to 12 percent, including growth in the U.S. home products market of approximately 12 percent to 13 percent.
The Company now expects EPS before charges / gains for the full year to be in the range of $5.63 to $5.73, representing an increase at the midpoint of 36 percent versus a year ago.
For 2021, the Company expects to generate free cash flow of approximately $625 to $675 million.
“Our business remains well positioned to achieve our long-term goals,” said Patrick Hallinan, chief financial officer, Fortune Brands. “While the near-term backdrop has become increasingly dynamic, we have the talent and capabilities to overcome these challenges. We continue to see high consumer demand and multiple pathways for earnings growth. Our balance sheet remains strong, and we have the ability to deploy capital to pursue the best returns for our shareholders.”
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.
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Source: Fortune Brands Home & Security, Inc.