Highlights:
- Q4 2023 sales were $1.2 billion, an increase of 3 percent
over Q4 2022. Organic sales excluding the impact of the
non-reoccurring 53rd week and FX were $1.1 billion, a decrease of 3
percent versus Q4 2022
- Q4 2023 earnings per share (EPS) were $0.64, a decrease of
35 percent versus a year ago; EPS before charges / gains were
$0.95, a decrease of 11 percent versus Q4 2022, reflecting the
impact of one-time separation items and the 53rd week
- Full-year 2023 sales were $4.6 billion, a decrease of 2
percent over 2022. Organic sales excluding the impact of the
non-reoccurring 53rd week and FX were $4.4 billion, a decrease of 6
percent versus full year 2022
- Full-year 2023 EPS were $3.17, a decrease of 23 percent
versus 2022; EPS before charges / gains were $3.91, a decrease of 8
percent versus 2022, reflecting the impact of one-time separation
items and the 53rd week
- Company announces new $650 million share repurchase
authorization reflecting confidence in outlook and commitment to
driving long-term shareholder value
- Company provides 2024 guidance prioritizing above-market
sales performance, margin expansion and continued cash
generation
Fortune Brands Innovations, Inc. (NYSE: FBIN or “Fortune Brands”
or the “Company”), an industry leading innovation company focused
on creating smarter, safer and more beautiful homes and lives,
today announced fourth quarter and full-year 2023 results.
“Our results this year demonstrate our focus on generating sales
above the market, preserving margins, and generating cash. Our
teams delivered in the face of a challenging macro environment
while also advancing several long-term initiatives and executing on
our priorities,” said Fortune Brands Chief Executive Officer
Nicholas Fink. “Over the past year, we have taken transformative
actions toward better leveraging the strength of our aligned
organization and sharpening our focus on our leading brands,
meaningful innovation, and our advantaged channel relationships.
These actions combined with our focus on the parts of the market
with long-term outsized growth opportunities, give me confidence in
our ability to perform in 2024 – and beyond.”
Fourth Quarter 2023
Results
($ in millions, except per share amounts; Change compared to
prior year)
Unaudited
Q4 2023 Total Company Results
Reported Net Sales
Operating Income
Operating Margin
EPS
Q4 2023 GAAP
$1,161
$134.0
11.5%
$0.64
Change
3%
(26%)
(460 bps)
(35%)
Reported Net Sales
Operating Income
Before Charges / Gains
Operating Margin
Before Charges / Gains
EPS
Before Charges / Gains
Q4 2023 Non-GAAP
$1,161
$183.6
15.8%
$0.95
Change
3%
(6%)
(150 bps)
(11%)
Q4 2023 Net Sales and Operating Margin
Results
Net Sales
Change
Operating
Margin
Change
Operating
Margin Before
Charges/Gains
Change
Reported
Organic
excl. 53rd
week and FX
Reported
Organic
excl. 53rd
week and FX
Water Innovations
$663
$628
3%
(2%)
21.1%
(260 bps)
21.8%
(220 bps)
Outdoors
$309
$313
(7%)
(6%)
2.4%
(950 bps)
13.9%
10 bps
Security
$189
$163
20%
4%
13.0%
(390 bps)
17.2%
20 bps
Total FBIN
$1,161
$1,104
3%
(3%)
11.5%
(460 bps)
15.8%
(150 bps)
Comments on the Fourth Quarter
Segment results were impacted by lower sales volumes and the
non-reoccurring 53rd week. Water Innovations sales increased due to
the Emtek acquisition. Security sales increased driven by the U.S.
and Canadian Yale and August residential smart locks acquisition.
Earnings per share year-over-year results were impacted by one-time
items related to the Cabinets separation and the impact of the 53rd
week.
Full-Year 2023 Results
($ in millions, except per share amounts; Change compared to
prior year)
Unaudited
Full-Year 2023 Total Company
Results
Reported Net Sales
Operating Income
Operating Margin
EPS
FY 2023 GAAP
$4,626
$614.9
13.3%
$3.17
Change
(2%)
(21%)
(310 bps)
(23%)
Reported Net Sales
Operating Income
Before Charges / Gains
Operating Margin
Before Charges / Gains
EPS
Before Charges / Gains
FY 2023 Non-GAAP
$4,626
$738.0
16.0%
$3.91
Change
(2%)
(9%)
(110 bps)
(8%)
Full-Year 2023 Net Sales and Operating
Margin Results
Net Sales
Change
Operating
Margin
Change
Operating
Margin Before
Charges/Gains
Change
Reported
Organic
excl. 53rd
week and FX
Reported
Organic
excl. 53rd
week and FX
Water Innovations
$2,562
$2,446
0%
(5%)
22.4%
(150 bps)
22.7%
(150 bps)
Outdoors
$1,341
$1,345
(12%)
(11%)
10.0%
(280 bps)
13.0%
(120 bps)
Security
$723
$652
14%
3%
8.6%
(640 bps)
16.0%
90 bps
Total FBIN
$4,626
$4,442
(2%)
(6%)
13.3%
(310 bps)
16.0%
(110 bps)
Comments on the Full Year
Segment results were impacted by lower volumes. Sales results in
Water Innovations and Security were partially offset by the impact
of the recent acquisition. Full-year operating margins were
impacted by first half inventory actions, particularly in Water
Innovations and Outdoors. Earnings per share year-over-year results
were impacted by one-time items related to the Cabinets separation
and the impact of the 53rd week.
Balance Sheet and Cash
Flow
The Company exited the year with a strong balance sheet, closing
with $1.1 billion in operating cash flow and $799 million in free
cash flow. Due to its continued strong cash flow, the Company
repurchased $20 million of shares in the quarter, bringing the full
year total to $150 million. The Company finished the year with full
availability on its revolver and continues to de-lever from its
recent transformative acquisition.
As of the end of the fourth quarter 2023:
Net debt
$2.3 billion
Net debt to EBITDA before charges /
gains
2.5x
Cash
$366 million
Amount available under revolving credit
facility
$1.25 billion
Share Repurchase
Authorization
The Company announced that on January 29, 2024, its Board of
Directors authorized the repurchase of up to $650 million of shares
of the Company’s outstanding common stock over the next two years
on the open market or in privately negotiated transactions or
otherwise (including pursuant to a Rule 10b5-1 trading plan, block
trades and accelerated share repurchase transactions), in
accordance with applicable securities laws. The $650 million share
repurchase authorization announced today is in addition to the $435
million remaining from an existing authorization which expires on
March 1, 2024.
The new purchases, if made, will occur from time to time
depending on market conditions. The newly announced share
repurchase authorization does not obligate the Company to
repurchase any dollar amount or number of shares of common stock.
This authorization is in effect until January 29, 2026, and may be
suspended or discontinued at any time.
2024 Market and Financial
Guidance
“Our full year 2024 financial guidance reflects our expectation
of outperformance as we execute our strategy of growing the core
and accelerating connected products, and the defined pathway we see
toward margin growth,” said Fortune Brands Chief Financial Officer
David Barry. “As we position Fortune Brands for continued
shareholder value creation, we will prioritize above-market sales
growth opportunities, margin expansion and cash generation, while
continuing to invest in key strategic priorities with a
returns-focused view. The share repurchase authorization that we
announced today reflects our continued confidence in the strength
of our business and focus on long-term performance.”
2024 Full-Year Guidance
2024 Full-Year Guidance
MARKET
Global market
-3% to 0%
U.S. market
-2% to 0%
U.S. R&R
-4% to -2%
U.S. SFNC
5% to 7%
China market
-9% to -7%
TOTAL COMPANY FINANCIAL METRICS
Net sales
3.5% to 5.5%
Net sales [organic]
-1% to 1%
Operating margin before charges /
gains
16.5% to 17.5%
EPS before charges / gains
$4.20 to $4.40
Cash flow from operations
Around $720 million
Free cash flow
Around $520 million
Cash conversion
Around 100%
SEGMENT FINANCIAL METRICS
Water Innovations net sales
3% to 5%
Water Innovations net sales [organic]
-2% to 0%
Water Innovations operating margin before
charges / gains
24% to 24.5%
Outdoors net sales
1% to 3%
Outdoors operating margin before charges /
gains
13.5% to 14.5%
Security net sales
10% to 12%
Security net sales [organic]
0% to 2%
Security operating margin before charges /
gains
15.5% to 16.5%
OTHER ITEMS
Corporate expense
$140 million to $145 million
Interest expense
$118 million to $120 million
Other income / expense
Around $5 million
Tax rate
23.25% to 23.5%
Share count
Around 127 million
For certain forward-looking non-GAAP measures (as used in this
press release, operating margin before charges / gains, EPS before
charges / gains and cash conversion), the Company is unable to
provide a reconciliation to the most comparable GAAP financial
measure because the information needed to reconcile these measures
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, which
are excluded from EPS before charges / gains and cash conversion,
and restructuring and other charges, which are excluded from
operating margin before charges / gains, EPS before charges / gains
and cash conversion. 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 measures are estimated consistent with the relevant
definitions and assumptions.
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 will be available on the Fortune Brands website at
ir.fbin.com/upcoming-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), 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, Emtek, Therma-Tru,
Larson, Fiberon, Master Lock, SentrySafe, Yale and August. To learn
more about FBIN, its brands and environmental, social and
governance (ESG) commitments, visit 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 (the “Exchange Act”).
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 expectations for the markets in which we operate,
general business strategies, the market potential of our brands,
trends in the housing market, the potential impact of costs,
including material and labor costs, the potential impact of
inflation, expected capital spending, expected pension
contributions, the expected impact of acquisitions, dispositions
and other strategic transactions, the anticipated impact of
recently issued accounting standards on our financial statements,
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” and similar
expressions or future or conditional verbs such as “will,”
“should,” “would,” “may,” “confident,” “opportunity” 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 ability to improve
organizational productivity and global supply chain efficiency and
flexibility, (vii) risks associated with global commodity and
energy availability and price volatility, as well as the
possibility of sustained inflation, (viii) delays or outages in our
information technology systems or computer networks, (ix) risks
associated with doing business globally, including changes in
trade-related tariffs and risks with uncertain trade environments,
(x) risks associated with the disruption of operations, (xi) our
inability to obtain raw materials and finished goods in a timely
and cost-effective manner, (xii) 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, (xiii) impairments in the carrying value of goodwill
or other acquired intangible assets, (xiv) risk of increases in our
defined benefit-related costs and funding requirements, (xv) our
ability to attract and retain qualified personnel and other labor
constraints, (xvi) the effect of climate change and the impact of
related changes in government regulations and consumer preferences,
(xvii) risks associated with environmental, social and governance
matters, (xviii) changes in government and industry regulatory
standards, (xix) future tax law changes or the interpretation of
existing tax laws, (xx) our ability to secure and protect our
intellectual property rights, and (xxi) potential liabilities and
costs from claims and litigation. 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 31, 2022. We undertake no
obligation to, and expressly disclaim any such obligation to,
update 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 per share before charges / gains, operating income
before charges / gains, operating margin before charges / gains,
net debt, net debt to EBITDA before charges / gains, sales
excluding the impact of acquisitions (organic sales), organic sales
excluding the impact of the non-reoccurring 53rd week and FX, free
cash flow and cash conversion. These non-GAAP 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.
FORTUNE BRANDS INNOVATIONS, INC. (In millions)
(Unaudited)
Thirteen Weeks Ended Three Months
Ended Fifty-two Weeks Ended Twelve Months Ended
Net sales (GAAP) December 30, 2023 December 31,
2022 $ Change % Change December 30, 2023
December 31, 2022 $ Change % Change Water
$
663.0
$
641.5
$
21.5
3
$
2,562.2
$
2,570.2
$
(8.0
)
-
Outdoors
309.2
333.0
(23.8
)
(7
)
1,341.1
1,517.4
(176.3
)
(12
)
Security
189.1
157.4
31.7
20
722.9
635.4
87.5
14
Total net sales
$
1,161.3
$
1,131.9
$
29.4
3
$
4,626.2
$
4,723.0
$
(96.8
)
(2
)
RECONCILIATIONS OF GAAP OPERATING INCOME TO OPERATING
INCOME BEFORE CHARGES/GAINS (In millions) (Unaudited)
Thirteen Weeks Ended Three Months Ended
Fifty-two Weeks Ended Twelve Months Ended December
30, 2023 December 31, 2022 $ Change %
Change December 30, 2023 December 31, 2022 $
Change % Change WATER Operating income
(GAAP)
$
139.7
$
151.9
$
(12.2
)
(8
)
$
574.3
$
614.6
$
(40.3
)
(7
)
Restructuring charges
0.9
2.5
(1.6
)
(64
)
2.2
6.3
(4.1
)
(65
)
Other charges/(gains) Cost of products sold
2.2
(0.1
)
2.3
(2,300
)
2.6
(0.2
)
2.8
(1,400
)
Selling, general and administrative expenses
-
-
-
-
-
0.8
(0.8
)
(100
)
Amortization of inventory step-up (f)
1.5
-
1.5
NM
3.5
1.3
2.2
169
Operating income before charges/gains (a)
$
144.3
$
154.2
$
(9.9
)
(6
)
$
582.6
$
622.8
$
(40.2
)
(6
)
OUTDOORS Operating income (GAAP)
$
7.3
$
39.6
$
(32.3
)
(82
)
$
133.5
$
194.2
$
(60.7
)
(31
)
Restructuring charges
1.2
6.1
(4.9
)
(80
)
4.3
24.5
(20.2
)
(82
)
Other charges/(gains) Cost of products sold
0.3
-
0.3
NM
(0.1
)
(5.4
)
5.3
(98
)
Selling, general and administrative expenses
-
-
-
-
0.1
0.2
(0.1
)
(50
)
Solar compensation (e)
0.6
0.3
0.3
100
2.7
2.1
0.6
29
Asset impairment charges (g)
33.5
-
33.5
NM
33.5
-
33.5
NM
Operating income before charges/gains (a)
42.9
46.0
$
(3.1
)
(7
)
174.0
215.6
$
(41.6
)
(19
)
SECURITY Operating income (GAAP)
$
24.6
$
26.7
$
(2.1
)
(8
)
$
62.4
$
95.4
$
(33.0
)
(35
)
Restructuring charges
1.5
0.1
1.4
1,400
25.3
0.6
24.7
4,117
Other charges/(gains) Cost of products sold
6.5
-
6.5
NM
19.2
-
19.2
NM
Amortization of inventory step-up (f)
-
-
-
-
8.9
-
8.9
NM
Operating income before charges/gains (a)
$
32.6
$
26.8
$
5.8
22
$
115.8
$
96.0
$
19.8
21
CORPORATE Corporate expense (GAAP)
$
(37.6
)
$
(35.9
)
$
(1.7
)
5
$
(155.3
)
$
(129.9
)
$
(25.4
)
20
Restructuring charges
-
1.5
(1.5
)
(100
)
0.7
1.0
(0.3
)
(30
)
Other charges/(gains)
-
-
Selling, general and administrative expenses
0.3
0.2
0.1
50
0.5
0.9
(0.4
)
(44
)
ASSA transaction expenses (d)
1.1
3.3
(2.2
)
(67
)
19.7
3.3
16.4
497
General and administrative expenses before charges/gains (a)
$
(36.2
)
$
(30.9
)
$
(5.3
)
17
$
(134.4
)
$
(124.7
)
$
(9.7
)
8
TOTAL COMPANY Operating income (GAAP)
$
134.0
$
182.2
$
(48.2
)
(26
)
$
614.9
$
774.3
$
(159.4
)
(21
)
Restructuring charges
3.6
10.2
(6.6
)
(65
)
32.5
32.4
0.1
-
Other charges/(gains) Cost of products sold
9.0
(0.1
)
9.1
(9,100
)
21.7
(5.6
)
27.3
(488
)
Selling, general and administrative expenses
0.3
0.2
0.1
50
0.6
1.9
(1.3
)
(68
)
Solar compensation (e)
0.6
0.3
0.3
100
2.7
2.1
0.6
29
ASSA transaction expenses (d)
1.1
3.3
(2.2
)
(67
)
19.7
3.3
16.4
497
Amortization of inventory step-up (f)
1.5
-
1.5
NM
12.4
1.3
11.1
854
Asset impairment charges (g)
33.5
-
33.5
NM
33.5
-
33.5
NM
Operating income before charges/gains (a)
$
183.6
$
196.1
$
(12.5
)
(6
)
$
738.0
$
809.7
$
(71.7
)
(9
)
NM - Not Meaningful (a) (d) (e) (f) (g) For
definitions of Non-GAAP measures, see Definitions of Terms page
FORTUNE BRANDS INNOVATIONS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (GAAP) (In millions)
(Unaudited)
December 30,
December 31,
2023
2022
Assets Current assets Cash and cash equivalents
$
366.4
$
642.5
Accounts receivable, net
534.2
521.8
Inventories
941.3
1,021.3
Other current assets
155.8
274.8
Total current assets
1,997.7
2,460.4
Property, plant and equipment, net
975.0
783.7
Goodwill
1,906.8
1,640.7
Other intangible assets, net of accumulated amortization
1,354.7
1,000.8
Other assets
289.9
235.3
Total assets
$
6,524.1
$
6,120.9
Liabilities and equity Current liabilities
Short-term debt
$
-
$
599.2
Accounts payable
531.4
421.6
Other current liabilities
628.0
523.9
Total current liabilities
1,159.4
1,544.7
Long-term debt
2,670.1
2,074.3
Deferred income taxes
111.3
136.9
Other non-current liabilities
289.9
278.1
Total liabilities
4,230.7
4,034.0
Stockholders' equity
2,293.4
2,086.9
Total equity
2,293.4
2,086.9
Total liabilities and equity
$
6,524.1
$
6,120.9
FORTUNE BRANDS INNOVATIONS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)
(Unaudited)
Fifty-two Weeks
Ended Twelve Months Ended December 30, 2023
December 31, 2022 Operating activities Net income
$
404.5
$
686.7
Depreciation and amortization
168.8
191.6
Recognition of actuarial gains
(0.5
)
(1.2
)
Non-cash lease expense
32.1
45.2
Deferred taxes
(26.1
)
14.8
Asset impairment charges
33.5
46.4
Other non-cash items
37.3
57.3
Changes in assets and liabilities, net
406.2
(474.5
)
Net cash provided by operating activities
$
1,055.8
$
566.3
Investing activities Capital expenditures
$
(256.5
)
$
(246.1
)
Proceeds from the disposition of assets
2.8
8.2
Cost of acquisitions, net of cash acquired
(784.1
)
(217.6
)
Net cash used in investing activities
$
(1,037.8
)
$
(455.5
)
Financing activities Increase in debt, net
$
(4.9
)
$
(37.1
)
Proceeds from the exercise of stock options
18.0
1.1
Treasury stock purchases
(150.0
)
(580.1
)
Dividends to stockholders
(116.8
)
(145.6
)
Dividends received from MasterBrand
-
940.0
Cash retained by MasterBrand at Spin-off
-
(56.3
)
Other items, net
(17.6
)
(49.5
)
Net cash (used in) provided by financing activities
$
(271.3
)
$
72.5
Effect of foreign exchange rate changes on cash
$
0.5
$
(11.1
)
Net (decrease) increase in cash and cash equivalents
$
(252.8
)
$
172.2
Cash, cash equivalents and restricted cash* at beginning of period
648.3
476.1
Cash, cash equivalents and restricted cash* at end of period
$
395.5
$
648.3
FREE CASH
FLOW Fifty-two Weeks Ended Twelve Months
Ended 2024 Full Year December 30, 2023
December 31, 2022 Estimate Cash flow from
operations (GAAP)
$
1,055.8
$
566.3
$
715.0
Less: Capital expenditures
256.5
246.1
$
195.0
Free cash flow**
$
799.3
$
320.2
$
520.0
* Restricted cash of $26.9 million and $2.2 million is
included in Other current assets and Other assets, respectively, as
of December 30, 2023, and $2.1 million and $3.7 million is included
in Other current assets and Other assets, respectively, as of
December 31, 2022. ** Free cash flow is cash flow from
operations calculated in accordance with U.S. generally accepted
accounting principles ("GAAP") less capital expenditures. Free cash
flow does not include adjustments for certain non-discretionary
cash flows such as mandatory debt repayments. Free cash flow is a
measure not derived in accordance with GAAP. Management believes
that free cash flow provides investors with helpful supplemental
information about the Company's ability to fund internal growth,
make acquisitions, repay debt and related interest, pay dividends
and repurchase common stock. This measure may be inconsistent with
similar measures presented by other companies. The
Consolidated Statements of Cash Flows and Free Cash Flow presented
above include cash flows from continuing and discontinued
operations.
FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (GAAP) (In
millions, except per share amounts) (Unaudited)
Thirteen Weeks Ended Three Months Ended Fifty-two
Weeks Ended Twelve Months Ended December 30, 2023
December 31, 2022 % Change December 30, 2023
December 31, 2022 % Change Net sales
$
1,161.3
$
1,131.9
3
$
4,626.2
$
4,723.0
(2
)
Cost of products sold
666.3
659.6
1
2,714.8
2,790.1
(3
)
Selling, general and administrative expenses
305.8
267.3
14
1,168.4
1,077.9
8
Amortization of intangible assets
18.1
12.6
44
62.1
48.3
29
Asset impairment charges
33.5
-
NM
33.5
-
NM
Restructuring charges
3.6
10.2
(65
)
32.5
32.4
-
Operating income
134.0
182.2
(26
)
614.9
774.3
(21
)
Interest expense
28.7
33.8
(15
)
116.5
119.2
(2
)
Other (income) expense, net
1.4
(7.0
)
(120
)
(19.5
)
(12.0
)
63
Income from continuing operations before income taxes
103.9
155.4
(33
)
517.9
667.1
(22
)
Income tax
22.6
27.2
(17
)
112.4
127.2
(12
)
Income from continuing operations, net of tax
$
81.3
$
128.2
(37
)
$
405.5
$
539.9
(25
)
Income (loss) from discontinued operations, net of
tax
-
(18.3
)
(100
)
(1.0
)
146.8
(101
)
Net income
$
81.3
$
109.9
(26
)
$
404.5
$
686.7
(41
)
Net income attributable to Fortune Brands
$
81.3
$
109.9
(26
)
$
404.5
$
686.7
(41
)
Diluted earnings per common share Continuing
operations
$
0.64
$
0.99
(35
)
$
3.17
$
4.11
(23
)
Discontinued operations
$
-
$
(0.14
)
100
$
-
$
1.12
(100
)
Diluted EPS attributable to Fortune Brands
$
0.64
$
0.85
(25
)
$
3.17
$
5.23
(39
)
Diluted average number of shares outstanding
127.1
129.0
(1
)
127.7
131.3
(3
)
NM - Not Meaningful
FORTUNE BRANDS INNOVATIONS,
INC. (In millions) (Unaudited)
RECONCILIATIONS OF INCOME FROM CONTINUING OPERATIONS, NET OF TAX
TO EBITDA BEFORE CHARGES/GAINS Thirteen Weeks
Ended Three Months Ended Fifty-two Weeks Ended
Twelve Months Ended December 30, 2023 December 31,
2022 % Change December 30, 2023 December 31,
2022 % Change Income from continuing
operations, net of tax
$
81.3
$
128.2
(37
)
$
405.5
$
539.9
(25
)
Depreciation *
$
30.8
$
21.9
41
$
90.4
$
82.7
9
Amortization of intangible assets
18.1
12.6
44
62.1
48.3
29
Restructuring charges
3.6
10.2
(65
)
32.5
32.4
-
Other charges/(gains)
9.3
0.1
100
22.3
(3.7
)
(703
)
ASSA transaction expenses (d)
1.1
3.3
(67
)
19.7
3.3
497
Solar compensation (e)
0.6
0.3
100
2.7
2.1
29
Amortization of inventory step-up (f)
1.5
-
NM
12.4
1.3
854
Asset impairment charges (g)
33.5
-
NM
33.5
-
NM
Interest expense
28.7
33.8
(15
)
116.5
119.2
(2
)
Defined benefit plan actuarial (gains)/losses
1.9
(1.6
)
(219
)
(0.5
)
(1.2
)
(58
)
Income taxes
22.6
27.2
(17
)
112.4
127.2
(12
)
EBITDA before charges/gains (c)
$
233.0
$
236.0
(1
)
$
909.5
$
951.5
(4
)
* Depreciation excludes accelerated depreciation expense of
$8.4 million for the thirteen weeks ended December 30, 2023, and
$16.3 million for the fifty-two weeks ended December 30, 2023.
Accelerated depreciation is included in restructuring and other
charges/gains.
CALCULATION OF NET DEBT-TO-EBITDA
BEFORE CHARGES/GAINS RATIO Short-term debt **
$
-
Long-term debt **
2,670.1
Total debt
2,670.1
Less: Cash and cash equivalents **
366.4
Net debt (1)
$
2,303.7
For the twelve months ended December 30, 2023 EBITDA before
charges/gains (2) (c)
$
909.5
Net debt-to-EBITDA before charges/gains ratio (1/2)
2.5
** Amounts are per the Unaudited Condensed Consolidated
Balance Sheet as of December 30, 2023. NM - Not
Meaningful (c) (d) (e) (f) (g) For definitions of Non-GAAP
measures, see Definitions of Terms page
RECONCILIATION OF DILUTED EPS FROM CONTINUING OPERATIONS BEFORE
CHARGES/GAINS For the thirteen weeks ended December 30,
2023, the diluted EPS before charges/gains is calculated as income
from continuing operations on a diluted per-share basis, excluding
$3.6 million ($2.8 million after tax or $0.02 per diluted share) of
restructuring charges, $9.3 million ($7.2 million after tax or
$0.06 per diluted share) of other charges/gains, $1.1 million ($0.8
million after tax or $0.01 per diluted share) of expenses directly
related to our ASSA transaction, $0.6 million ($0.5 million after
tax) related to the compensation agreement with the former owner of
Solar, $1.5 million ($1.1 million after tax or $0.01 per diluted
share) of amortization of inventory step-up related to acquisition
of the ASSA businesses, $33.5 million ($25.4 million after tax or
$0.20 per diluted share) of asset impairment charges and the impact
from actuarial losses associated with our defined benefit plans of
$1.9 million ($1.4 million after tax or $0.01 per diluted share).
For the fifty-two weeks ended December 30, 2023, the diluted
EPS before charges/gains is calculated as income from continuing
operations on a diluted per-share basis, excluding $32.5 million
($24.8 million after tax or $0.20 per diluted share) of
restructuring charges, $23.3 million ($17.0 million after tax or
$0.13 per diluted share) of other charges/gains, $18.7 million
($15.1 million after tax or $0.12 per diluted share) of expenses
directly related to our ASSA transaction, $2.7 million ($2.0
million after tax or $0.02 per diluted share) related to the
compensation agreement with the former owner of Solar, $12.4
million ($9.5 million after tax or $0.07 per diluted share) of
amortization of inventory step-up related to acquisition of the
ASSA businesses, $33.5 million ($25.4 million after tax or $0.20
per diluted share) of asset impairment charges and the impact from
actuarial gains associated with our defined benefit plans of $0.5
million ($0.4 million after tax). For the three months ended
December 31, 2022, the diluted EPS before charges/gains is
calculated as income from continuing operations on a diluted
per-share basis, excluding $10.2 million ($7.7 million after tax or
$0.07 per diluted share) of restructuring charges, $0.1 million
($0.1 million after tax) of other charges/gains, $3.3 million ($2.5
million after tax or $0.02 per diluted share) of expenses directly
related to our ASSA transaction, $0.3 million ($0.2 million after
tax) related to the compensation agreement with the former owner of
Solar and the impact for actuarial gains associated with our
defined benefit plans of $1.6 million ($1.2 million after tax or
$0.01 per diluted share). For the twelve months ended
December 31, 2022, the diluted EPS before charges/gains is
calculated as income from continuing operations on a diluted
per-share basis, excluding $32.4 million ($24.3 million after tax
or $0.19 per diluted share) of restructuring charges, $0.4 million
($3.3 million after tax or $0.02 per diluted share) of other
charges/gains, $3.3 million ($2.5 million after tax or $0.02 per
diluted share) of expenses directly related to our ASSA
transaction, $2.1 million ($1.8 million after tax or $0.01 per
diluted share) related to the compensation agreement with the
former owner of Solar, the impact for actuarial gains associated
with our defined benefit plans of $1.2 million ($0.9 million after
tax or $0.01 per diluted share) and a tax benefit of $8.4 million
($0.06 per diluted share).
Thirteen Weeks Ended
Three Months Ended
Fifty-two Weeks Ended
Twelve Months Ended
December 30, 2023
December 31, 2022
% Change
December 30, 2023
December 31, 2022
% Change
Earnings per common share (EPS) - Diluted Diluted
EPS from continuing operations (GAAP)
$
0.64
$
0.99
(35
)
$
3.17
$
4.11
(23
)
Restructuring charges
0.02
0.07
(71
)
0.20
0.19
5
Other charges/(gains)
0.06
-
NM
0.13
(0.02
)
(750
)
ASSA transaction expenses (d)
0.01
0.02
(50
)
0.12
0.02
500
Solar compensation (e)
-
-
-
0.02
0.01
100
Amortization of inventory step-up (f)
0.01
-
NM
0.07
-
NM
Asset impairment charges (g)
0.20
-
NM
0.20
-
NM
Defined benefit plan actuarial (gains)/losses
0.01
(0.01
)
(200
)
-
(0.01
)
(100
)
Tax items
-
-
-
-
(0.06
)
(100
)
Diluted EPS from continuing operations before charges/gains
(b)
$
0.95
$
1.07
(11
)
$
3.91
$
4.24
(8
)
NM - Not Meaningful (b) (d) (e) (f) (g) For definitions of
Non-GAAP measures, see Definitions of Terms page
FORTUNE
BRANDS INNOVATIONS, INC. (In millions, except per share
amounts) (Unaudited)
Thirteen Weeks
Ended Three Months Ended Fifty-two Weeks Ended
Twelve Months Ended December 30, 2023 December 31,
2022 % Change December 30, 2023 December 31,
2022 % Change Net sales (GAAP) Water
$
663.0
$
641.5
3
$
2,562.2
$
2,570.2
-
Outdoors
309.2
333.0
(7
)
1,341.1
1,517.4
(12
)
Security
189.1
157.4
20
722.9
635.4
14
Total net sales
$
1,161.3
$
1,131.9
3
$
4,626.2
$
4,723.0
(2
)
Operating income (loss) Water
$
139.7
$
151.9
(8
)
$
574.3
$
614.6
(7
)
Outdoors
7.3
39.6
(82
)
133.5
194.2
(31
)
Security
24.6
26.7
(8
)
62.4
95.4
(35
)
Corporate expenses
(37.6
)
(35.9
)
5
(155.3
)
(129.9
)
20
Total operating income (GAAP)
$
134.0
$
182.2
(26
)
$
614.9
$
774.3
(21
)
OPERATING INCOME BEFORE
CHARGES/GAINS RECONCILIATION Total operating
income (GAAP)
$
134.0
$
182.2
(26
)
$
614.9
$
774.3
(21
)
Restructuring charges (1)
3.6
10.2
(65
)
32.5
32.4
-
Other charges/(gains) (2)
9.3
0.1
9,200
22.3
(3.7
)
(703
)
ASSA transaction expenses (d)
1.1
3.3
(67
)
19.7
3.3
497
Solar compensation (e)
0.6
0.3
100
2.7
2.1
29
Amortization of inventory step-up (f)
1.5
-
NM
12.4
1.3
854
Asset impairment charges (g)
33.5
-
NM
33.5
-
NM
Operating income (loss) before charges/gains (a)
$
183.6
$
196.1
(6
)
$
738.0
$
809.7
(9
)
Water
$
144.3
$
154.3
(6
)
$
582.6
$
622.8
(6
)
Outdoors
42.9
46.0
(7
)
174.0
215.6
(19
)
Security
32.6
26.8
22
115.8
96.0
21
Corporate expenses
(36.2
)
(30.9
)
17
(134.4
)
(124.7
)
8
Total operating income before charges/gains (a)
$
183.6
196.1
(6
)
738.0
809.7
(9
)
(1) Restructuring charges, which include costs incurred for
significant cost reduction initiatives and workforce reduction
costs by segment, totaled $3.6 million and $32.5 million for the
thirteen weeks ended and twelve months ended December 30, 2023,
respectively, and $10.2 million and $32.4 million for the three and
twelve months ended December 30, 2022, respectively. (2)
Other charges/gains represent costs that are directly related to
restructuring initiatives but cannot be reported as restructuring
costs under GAAP. These costs can include losses from disposing of
inventories, trade receivables allowances from discontinued product
lines, accelerated depreciation due to the closure of facilities,
and gains or losses from selling previously closed facilities.
During the thirteen weeks and twelve months ended December 30,
2023, total other charges were $9.3 million and $22.3 million,
respectively. For the three and twelve months ended December 30,
2022, total charges were $0.1 million and $(3.7) million,
respectively. NM - Not Meaningful (a) (d) (e) (f) (g) For
definitions of Non-GAAP measures, see Definitions of Terms page
FORTUNE BRANDS INNOVATIONS, INC. OPERATING
MARGIN TO BEFORE CHARGES/GAINS OPERATING MARGIN (Unaudited)
Thirteen Weeks Ended
Three Months Ended
Fifty-two Weeks Ended
Twelve Months Ended,
December 30, 2023
December 31, 2022
Change
December 30, 2023
December 31, 2022
Change
WATER Operating margin
21.1%
23.7%
(260) bps
22.4%
23.9%
(150) bps Restructuring charges
0.1%
0.3%
0.1%
0.2%
Other charges/(gains)
-
-
Cost of products sold
0.3%
-
0.1%
-
Amortization of inventory step-up (f)
0.3%
-
0.1%
0.1%
Before charges/gains operating margin
21.8%
24.0%
(220) bps
22.7%
24.2%
(150) bps
OUTDOORS
Operating margin
2.4%
11.9%
(950) bps
10.0%
12.8%
(280) bps Restructuring charges
0.4%
1.8%
0.3%
1.6%
Other charges/(gains)
-
-
Cost of products sold
0.1%
-
-
(0.3%)
Selling, general and administrative expenses
-
-
-
-
Solar compensation (e)
0.2%
0.1%
0.2%
0.1%
Asset Impairment charges (g)
10.8%
-
2.5%
-
Before charges/gains operating margin
13.9%
13.8%
10 bps
13.0%
14.2%
(120) bps
SECURITY
Operating margin
13.0%
16.9%
(390) bps
8.6%
15.0%
(640) bps Restructuring charges
0.8%
0.1%
3.5%
0.1%
Other charges/(gains)
-
-
Cost of products sold
3.4%
-
2.7%
-
Amortization of inventory step-up (f)
-
-
1.2%
-
Before charges/gains operating margin
17.2%
17.0%
20 bps
16.0%
15.1%
90 bps
TOTAL COMPANY
Operating margin
11.5%
16.1%
(460) bps
13.3%
16.4%
(310) bps Restructuring charges
0.3%
0.9%
0.7%
0.7%
Other charges/(gains)
Cost of products sold
0.8%
-
0.5%
(0.1%)
Selling, general and administrative expenses
-
-
-
-
Solar compensation (e)
0.1%
-
0.1%
-
ASSA transaction expenses (d)
0.1%
0.3%
0.4%
0.1%
Amortization of inventory step-up (f)
0.1%
-
0.3%
-
Asset Impairment charges (g)
2.9%
-
0.7%
-
Before charges/gains operating margin
15.8%
17.3%
(150) bps
16.0%
17.1%
(110) bps Operating margin is calculated as the operating
income in accordance with GAAP, divided by the GAAP net sales. The
before charges/gains operating margin is calculated as the
operating income, excluding restructurings charges and other
charges/gains, Solar compensation arrangement, ASSA transaction
expenses, amortization of inventory step-up associated with the
acquisition of the ASSA businesses and asset impairment charges,
divided by the GAAP net sales. This before charges/gains operating
margin is not a measure derived in accordance with GAAP. Management
uses this measure to evaluate the returns generated by the Company
and its business segments. Management believes that this measure
provides investors with helpful supplemental information about the
Company's underlying performance from period to period. However,
this measure may not be consistent with similar measures presented
by other companies. (d) (e) (f) (g) For definitions of
Non-GAAP measures, see Definitions of Terms page
FORTUNE BRANDS INNOVATIONS, INC. RECONCILIATION OF GAAP
NET SALES TO ORGANIC NET SALES EXCLUDING THE IMPACT OF
ACQUISITIONS, A 53rd WEEK & THE IMPACT OF FX
(Unaudited) Thirteen Weeks Ended Three
Months Ended Fifty-two Weeks Ended Twelve Months
Ended December 30, 2023 December 31, 2022 %
Change December 30, 2023 December 31, 2022 %
Change WATER Net sales (GAAP)
$
663.0
$
641.5
3
%
$
2,562.2
$
2,570.2
(0
%)
Impact of Aqualisa Acquisition
-
-
31.4
-
Impact of Emtek and Schaub Acquisition
59.3
-
133.8
-
Organic net sales excluding impact of acquisitions
$
603.7
$
641.5
(6
%)
$
2,397.0
$
2,570.2
(7
%)
Impact of 53rd week
24.8
-
24.8
-
Impact of FX
(0.6
)
-
24.4
-
Organic net sales excluding impact of acquisitions, 53rd week
& FX
$
627.9
$
641.5
(2
%)
$
2,446.2
$
2,570.2
(5
%)
OUTDOORS Net sales (GAAP)
$
309.2
$
333.0
(7
%)
$
1,341.1
$
1,517.4
(12
%)
Organic net sales
$
309.2
$
333.0
(7
%)
$
1,341.1
$
1,517.4
(12
%)
Impact of 53rd week
3.4
-
3.4
-
Impact of FX
-
-
-
-
Organic net sales excluding impact of acquisitions, 53rd week
& FX
$
312.6
$
333.0
(6
%)
$
1,344.5
$
1,517.4
(11
%)
SECURITY Net sales (GAAP)
$
189.1
$
157.4
20
%
$
722.9
$
635.4
14
%
Impact of Yale and August Acquisition
40.2
-
81.2
-
Organic net sales excluding impact of an acquisition
$
148.9
$
157.4
(5
%)
$
641.7
$
635.4
1
%
Impact of 53rd week
10.3
-
10.3
-
Impact of FX
3.8
-
(0.4
)
-
Organic net sales excluding impact of acquisitions, 53rd week
& FX
$
163.0
$
157.4
4
%
$
651.6
$
635.4
3
%
TOTAL COMPANY Net sales (GAAP)
$
1,161.3
$
1,131.9
3
%
$
4,626.2
$
4,723.0
(2
%)
Impact of Aqualisa Acquisition
-
-
31.4
-
Impact of Emtek and Schaub Acquisition
59.3
-
133.8
-
Impact of Yale and August Acquisition
40.2
-
81.2
-
Organic net sales excluding impact of acquisitions
$
1,061.8
$
1,131.9
(6
%)
$
4,379.8
$
4,723.0
(7
%)
Impact of 53rd week
38.5
-
38.5
-
Impact of FX
3.2
-
24.0
-
Organic net sales excluding impact of acquisitions, 53rd week
& FX
$
1,103.5
$
1,131.9
(3
%)
$
4,442.3
$
4,723.0
(6
%)
Reconciliation of GAAP Net sales to organic net sales
excluding the impact of acquisitions, the impact of a 53rd week and
the impact of FX on net sales is net sales derived in accordance
with GAAP excluding impact of the acquisitions of Aqualisa and
Emtek and Schaub in our Water segment, the acquisition of Yale and
August in our Security segment on net sales, a 53rd week in 2022
and the impact of FX. Management uses this measure to evaluate the
overall performance of its segments and believes this measure
provides investors with helpful supplemental information regarding
the underlying performance of the segment from period to period.
This measure may be inconsistent with similar measures presented by
other companies.
Definitions of Terms: Non-GAAP
Measures (a) Operating income (loss) before
charges/gains is calculated as operating income derived in
accordance with GAAP, excluding restructuring, other charges/gains,
ASSA transaction expenses, amortization of inventory step-up
associated with acquisition of the ASSA businesses, asset
impairment charges and charges for a compensation arrangement with
the former owner of Solar. Operating income (loss) before
charges/gains is a measure not derived in accordance with GAAP.
Management uses this measure to evaluate the returns generated by
the Company and its business segments. Management believes this
measure provides investors with helpful supplemental information
regarding the underlying performance of the Company from period to
period. This measure may be inconsistent with similar measures
presented by other companies. (b) Diluted earnings per share
from continuing operations before charges/gains is calculated as
income from continuing operations on a diluted per-share basis,
excluding restructuring and other charges/gains, ASSA transaction
expenses, amortization of inventory step-up associated with
acquisition of the ASSA businesses, asset impairment charges,
charges for a compensation arrangement with the former owner of
Solar, actuarial gains/losses associated with our defined benefit
plans and tax items. This measure is not in accordance with GAAP.
Management uses this measure to evaluate the Company's overall
performance and believes it provides investors with helpful
supplemental information about the Company's underlying performance
from period to period. However, this measure may not be consistent
with similar measures presented by other companies. (c)
EBITDA before charges/gains is calculated as income from continuing
operations, net of tax in accordance with GAAP, excluding
depreciation, amortization of intangible assets, restructuring and
other charges/gains, ASSA transaction expenses, amortization of
inventory step-up associated with acquisition of the ASSA
businesses, asset impairment charges, charges for a compensation
arrangement with the former owner of Solar, actuarial gains/losses
associated with our defined benefit plans, interest expense and
income taxes. EBITDA before charges/gains is a measure not derived
in accordance with GAAP. Management uses this measure to assess
returns generated by the Company. Management believes this measure
provides investors with helpful supplemental information about the
Company's ability to fund internal growth, make acquisitions and
repay debt and related interest. This measure may be inconsistent
with similar measures presented by other companies. (d) At
Corporate, other charges also include expenditures of $1.1 million
and $19.7 million for the thirteen weeks and fifty-two weeks ended
December 30, 2023, respectively, for external banking, legal,
accounting, and other similar services directly related to our ASSA
transaction. For the three months and twelve months ended December
31, 2022, other charges include expenditures of $3.3 million for
external banking, legal, accounting and other similar services
directly related to our ASSA transaction. (e) In Outdoors,
other charges include charges for a compensation arrangement with
the former owner of Solar classified in selling, general and
administrative expenses of $0.6 million and $2.7 million for the
thirteen weeks and fifty-two weeks ended December 30, 2023,
respectively. For the three months and twelve months ended December
31, 2022, other charges for a compensation agreement with the
former owner of Solar classified in selling, general and
administrative expenses of $0.3 million and $2.1 million,
respectively. (f) For the thirteen and fifty-two weeks ended
December 30, 2023, the amortization of inventory step-up associated
with the acquisition of the ASSA business was $1.5 million and $3.5
million for the Water segment, respectively and $8.9 million for
the fifty-two weeks ended December 30, 2023 for the Security
segment. (g) Asset impairment charges for the thirteen weeks
and fifty-two weeks ended December 30, 2023 represent pre-tax
impairment charges of $33.5 million related to indefinite-lived
tradenames in our Outdoor segment.
Additional
Information: In January 2023, the Board of Directors of
the Company approved a change to the Company’s fiscal year end from
December 31 to a 52-or 53-week fiscal year ending on the Saturday
closest but not subsequent to December 31, effective as of the
commencement of the Company’s fiscal year on January 1, 2023. This
change was made in order to align the Company’s fiscal year with
that of its operating businesses and to align the Company’s
reporting calendar with how the Company evaluates its businesses.
There was no material impact to any of our previously disclosed
financial information. In February 2023, we publicly
announced an internal reorganization to separate our Outdoors &
Security segment under separate leadership to drive innovation,
accelerate product development, and enhance investments and
business processes. In conjunction with the reorganization, we
changed how our chief operating decision maker evaluates and
allocates the resources for the combined business. Separate
reporting for the new Outdoors and Security segments began in the
first quarter of 2023 and historical financial segment information
has been restated to conform to the new segment presentation.
On December 14, 2022, the Company completed the previously
announced spin-off of its Cabinets business, MasterBrand, Inc.
("MasterBrand") (the "Spin-off"), in a tax-free transaction to the
Company and our stockholders for U.S. federal income tax purposes,
creating two independent, publicly traded companies. In addition,
the Company's name changed from "Fortune Brands Home &
Security, Inc." to "Fortune Brands Innovations, Inc." and its stock
ticker changed from "FBHS" to "FBIN" each of which became effective
subsequent to the completion of the Spin-off. The operating results
of the Cabinets business are reported as discontinued operations
for all periods presented. In July 2022, we acquired 100% of
the outstanding equity of Aqualisa, a leading U.K. manufacturer of
shower products known for premium, innovative, smart digital shower
systems, for a purchase price of $156.0 million, net of cash
acquired of $4.8 million. The results of Aqualisa are reported as
part of the Water Innovations segment. Its product offerings will
enable us to continue to leverage growing trends in water
management and connected products. We financed the transaction with
borrowings under our existing credit facilities. We have not
included pro forma financial information as it is immaterial to our
condensed consolidated statements of comprehensive income. The fair
value allocated to assets acquired and liabilities assumed as of
July 29, 2022, was $156.0 million. In the first quarter of
2022, our Plumbing segment was renamed Water Innovations in order
to better align with our key brands and organizational purpose. The
Plumbing segment name change is to the name only and had no impact
on the Company’s historical financial position, results of
operations, cash flow or segment level results previously reported.
In 2018, our Water Innovations segment entered into a
strategic partnership with, and acquired non-controlling equity
interests in, Flo, a U.S. manufacturer of comprehensive water
monitoring and shut-off systems with leak detection technologies.
In January 2020, we entered into an agreement to acquire the
remaining outstanding shares of Flo in a multi-phase transaction.
As part of this agreement, we acquired a majority of Flo’s
outstanding shares during 2020 and entered into a forward contract
to purchase all remaining shares of Flo during the first quarter of
2022 for a price based on a multiple of Flo’s 2021 sales and
adjusted earnings before interest and taxes. On January 30, 2022,
we made a final cash payment of $16.7 million to the legacy
minority shareholders to acquire such shares which is reflected
within Other financing, net in our consolidated statements of cash
flows. In January 2022, we acquired 100% of the outstanding
equity of Solar Innovations, a leading producer of wide-opening
exterior door systems and outdoor enclosures, for a purchase price
of $61.6 million, net of cash acquired of $4.8 million. We financed
the transaction using cash on hand and borrowings under our
revolving credit facility. The results of Solar are reported as
part of the Outdoors segment. Its complementary product offerings
support the segment’s outdoor living strategy.
For certain forward-looking non-GAAP
measures (as used in this press release, operating margin before
charges/gains, EPS before charges/gains and cash conversion), the
Company is unable to provide a reconciliation to the most
comparable GAAP financial measure because the information needed to
reconcile these measures 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, which are excluded from our diluted EPS
before charges/gains and cash conversion, and restructuring and
other charges, which are excluded from our operating margin before
charges/gains, diluted EPS before charges/gains and cash
conversion. 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 measures are estimated consistent with the relevant
definitions and assumptions.
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INVESTOR AND MEDIA CONTACT: Leigh Avsec 847-484-4211
Investor.Questions@fbhs.com
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