Fortune Brands Announces Third Quarter Results, Taking Action to Revitalize the Company's Performance

Highlights:

• Q3 2026 sales were $1.1 billion, a decrease of 3.1 percent versus Q3 2025; sales excluding the impact of China decreased 2.4 percent
• Q3 2026 GAAP EPS was $0.42, inclusive of a ($0.47) asset impairment charge
• Q3 2026 EPS before charges / gains was $1.14, inclusive of a $0.28 net tax benefit and $0.14 of net tariff refunds¹
• Took portfolio optimization actions related to Fiberon, the Company's China business and EMEA operating footprint
• Recently implemented leadership changes to strengthen execution and enable greater focus on individual business performance
• Updating full year 2026 guidance, reflecting actions to set up the Company for future success

DEERFIELD, Ill.--(BUSINESS WIRE)--Fortune Brands Innovations, Inc. (NYSE: FBIN) (“Fortune Brands” or the “Company”), an industry-leading home, security and digital products company, today announced third quarter 2026 results.

“Fortune Brands is in the early stages of a multi-year turnaround plan to get Back to Business. We are building from a strong foundation of brands that consumers and pros know and trust. Third quarter results were in line with our outlook excluding the tax and tariff benefits, but not where they need to be. Our biggest challenge has been our own execution, and we are taking aggressive steps to drive improvement,” said Fortune Brands Chief Executive Officer Jesse Singh.

“Service levels improved 10 percentage points in the third quarter, with fill rates in the high-90% range entering the fourth quarter. We have realigned the organization around customer-focused segments and expect to have more than 80% of our salaried workforce directly supporting a specific business by year end, up from roughly 40% at the start of the year. In addition, we have strengthened the leadership team with a new Chief Financial Officer, Chief Information Officer and Chief Legal Officer, and new leaders within each of our businesses. We remain on track for $70 million of annualized SG&A savings by the first quarter of 2027. We also entered into a purchase agreement to sell Fiberon, are exiting our commercial operations in China, which we expect to be completed by the third quarter of 2027 and are rationalizing the EMEA operating footprint of a business in our Water segment, which we expect to be completed by the fourth quarter of 2027. Together these businesses generate an annualized operating loss of approximately $50 million to $55 million on revenue of $320 million to $330 million.

“In the fourth quarter, we expect incrementally lower revenue, driven by three things: lower sales from the businesses involved in the portfolio optimization actions, incremental softening in single-family new construction, and a reduction in channel inventory. We are using this quarter’s net tax benefit to fund additional portfolio and alignment actions in the fourth quarter. The work ahead is substantial, but the opportunity is large: we have leading brands, customers and channel partners who want to win with us, and a team that is engaged and moving with urgency. I am confident that our actions will build a stronger, simpler and more customer-focused company that delivers consistent growth, margin expansion and shareholder value over the long term.”

Balance Sheet and Cash Flow

The Company ended the quarter with a strong balance sheet, liquidity of approximately $1.3 billion and net debt to EBITDA before charges and gains of 2.5x. In the quarter, the Company generated $347.0 million in operating cash flow and $331.1 million in free cash flow, while repurchasing $40 million of its shares.

As of the end of the third quarter 2026:

2026 Full-Year Guidance

“Looking ahead, we see a softer environment for single-family new construction and expect this part of the market to be down mid to high single digits, with R&R down low single digits for the year. Customers are signaling greater caution and we are taking a more conservative approach to channel inventory given the uncertain macroeconomic environment. We have also made important decisions on dilutive parts of our portfolio, which we expect will help improve future profitability. Those businesses will continue to have an impact on our results for the fourth quarter and the first half of next year. With these factors in mind, we are prudently updating our guidance for net sales and EPS before charges / gains. Fourth quarter and full year net sales are expected to be in the range of $925 million to $995 million and $4,205 million to $4,275 million, respectively. Fourth quarter and full year EPS before charges / gains is expected to be in the range of $0.19 to $0.29 and $3.20 to $3.30, respectively. We also expect full year operating cash flow and free cash flow to be in the range of $480 million to $500 million and $380 million to $410 million, respectively,” said Fortune Brands Chief Financial Officer Pete Clifford. “While these actions will weigh on our near-term results, they position us to enter 2027 on stronger footing.”

Full-Year Guidance Bridge

For certain forward-looking non-GAAP financial measures (as used in this press release, EPS before charges / gains), the Company is unable to provide a reconciliation to the most comparable GAAP financial measure because the information needed to reconcile the non-GAAP financial measure to the GAAP financial measure 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, and restructuring and other charges, which are each excluded from EPS before charges / gains, other than with respect to the Company’s previously-announced estimated additional non-cash impairment charge for the Fiberon asset group of approximately $175 million to $205 million. As a result, the Company is not otherwise able to reasonably estimate the probable significance of such items. 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 financial measures are estimated consistent with the relevant definitions and assumptions. For a reconciliation of full year 2026 free cash flow guidance to full year 2026 operating cash flow guidance, see the table entitled “Free Cash Flow” below.

Conference Call Details

Today at 5:00 p.m. ET, Fortune Brands will host an investor conference call to discuss results. A live audio webcast of the conference call and a copy of the earnings presentation will be available on the Fortune Brands website at ir.fbin.com/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) is an industry-leading home, security and digital products company. The Company makes innovative, reliable products that contribute to safety, enhance sustainability and provide luxury for residential and commercial customers. The Company’s trusted brands include Moen, House of Rohl, Aqualisa, SpringWell, Therma-Tru, Larson, Fiberon, Master Lock, Sentry Safe and Yale residential. Learn more at 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 strategies and investments to enhance execution and realign our business, our expectations for the markets in which we operate, expected impacts from recently-announced organizational and leadership changes, ongoing succession planning, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the other potential impacts of inflation, including consumer spending, expected capital spending, expected pension contributions or de-risking initiatives, the expected impact of acquisitions, dispositions and other strategic transactions, the anticipated impact of recently issued accounting standards on our financial statements, the anticipated impact of future tariff and tariff refunds 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,” “focus,” “on track” 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 associated with our recent leadership changes, (vii) risks relating to rapidly evolving technological change, (viii) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (ix) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (x) delays or outages in our information technology systems or computer networks or breaches of our information technology systems or other cybersecurity incidents, (xi) risks associated with doing business globally, including changes in trade-related tariffs (including recent U.S. tariffs announced or imposed on China, Canada, Mexico and other countries and any reciprocal actions taken by such countries) and risks with uncertain trade environments, (xii) risks associated with the disruption of operations, including as a result of severe weather events, (xiii) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xiv) 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, (xv) impairments in the carrying value of goodwill or other acquired intangible assets, (xvi) risks of increases in our defined benefit-related costs and funding requirements, (xvii) our ability to attract and retain qualified personnel and other labor constraints, (xviii) the effect of climate change and the impact of related changes in government regulations and consumer preferences, (xix) risks associated with environmental, social and governance matters, (xx) potential liabilities and costs from claims and litigation, (xxi) changes in government and industry regulatory standards, (xxii) future tax law changes or the interpretation of existing tax laws, and (xxiii) our ability to secure and protect our intellectual property rights. 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 27, 2025. We undertake no obligation to, and expressly disclaim any such obligation to, update, amend, revise 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 (loss) per share before charges / gains, operating income (loss) before charges / gains, operating margin before charges / gains, net debt, net debt to EBITDA before charges / gains, net sales excluding the impact of China, Outdoors net sales excluding the impact of Fiberon and free cash flow. These non-GAAP financial 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.

INVESTOR CONTACT:
Curt Worthington
Investor.Questions@fbin.com