Fortune Brands’ Results Solidly Ahead of Expectations Amid an Anticipated Challenging Macro Environment; Increases Full-Year 2023 EPS Guidance
Fortune Brands Innovations, Inc. (NYSE: FBIN or “Fortune Brands” or the “Company”), an industry-leading home, security and commercial building products company, today announced first quarter 2023 results.
- Q1 2023 sales were $1.0 billion, a decrease of 9 percent versus Q1 2022
- Q1 2023 earnings per share (EPS) were $0.67, a decrease of 29 percent versus a year ago; EPS before charges / gains were $0.69, a decrease of 24 percent versus Q1 2022
- Full-year EPS range adjusted upward to reflect operating outperformance and share repurchases
“Our solid results for our first full quarter as Fortune Brands Innovations speak to the true potential of our new Company,” said Fortune Brands Chief Executive Officer Nicholas Fink. “We took proactive steps to prepare for an expected challenging 2023, while also focusing on long-term growth. By leveraging our Fortune Brands Advantage capabilities and focusing on building leading brands, driving meaningful innovation, and collaborating with our channel partners, we will continue to position the Company for outperformance in any environment.”
Fink continued, “Looking forward, we remain confident in the mid- to long-term strength of the housing market. Our leading products play in the most attractive, highest growth areas of our markets, and our more balanced exposure to new construction and smaller-ticket repair and remodel should position us to capture exceptional opportunities as the housing market returns to growth.”
First Quarter 2023 Results
For the first quarter of 2023, sales were $1.0 billion, a decrease of 9 percent over the first quarter of 2022. Operating income was $131.8 million, compared to $179.8 million in the prior-year quarter, a decrease of 27 percent. Operating income before charges / gains was $136.7 million versus $176.0 million in 2022. Operating margin was 12.7 percent, compared to 15.8 percent in the first quarter of 2022. Operating margin before charges / gains was 13.1 percent, compared to 15.4 percent in the first quarter of 2022, a decrease of 230 basis points.
For each segment in the first quarter of 2023, compared to the prior-year quarter:
- Water Innovations sales decreased 8 percent, primarily due to lower sales volumes, partially offset by price. Excluding the impact of FX and the Aqualisa acquisition, net sales also decreased 8 percent. Operating margin before charges / gains was 21.6 percent.
- Outdoors sales decreased 16 percent, driven by lower sales volume in part due to channel inventory reductions and a return to normal seasonality across the segment, partially offset by price. Operating margin before charges / gains was 5.2 percent.
- Security sales increased 2 percent, driven by price and continued growth in the commercial safety business. Operating margin before charges / gains was 14.0 percent.
Balance Sheet and Liquidity
At the end of the quarter, net debt was $2.1 billion and net debt to EBITDA was 2.3x. The Company had $539 million in cash and full availability under its $1.25 billion revolving credit facility. The Company repurchased approximately $100 million in common stock in the quarter.Free cash flow was positive for the quarter, reflecting the favorable impact of the Company’s working capital and inventory reduction efforts.
The Company is increasing the midpoint of full-year EPS before charges / gains guidance by $0.05 to a range of $3.65 to $3.85, reflecting the Company’s operational outperformance amid an external environment that is expected to remain challenging and the impact of share repurchases. The Company continues to expect a global housing market decline of 6.5 percent to 8.5 percent with full-year net sales down in the range of 5 percent to 7 percent, operating margins between 16 percent and 17 percent, EBITDA margins before charges / gains of between 19 percent and 20 percent and free cash flow of approximately $475 million.
“We delivered solid sales and financial performance in an external operating environment that we expect will continue to be volatile,” said Fortune Brands Chief Financial Officer David Barry. “Our financial position is strong, and our teams remain agile in the face of macro headwinds. We will continue to position the Company for success by prioritizing above-market sales growth, margin preservation and enhancement and cash generation.”
For the complete press release, click here.
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, House of Rohl, Aqualisa, Therma-Tru, Larson, Fiberon, Master Lock and SentrySafe. To learn more about FBIN, its brands and environmental, social and governance (ESG) commitments, visit www.FBIN.com.
Leigh Avsec – Investor Relations – Investor.Questions@fbhs.com – (847) 484-4211
Source: Fortune Brands Innovations, Inc.