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OFFON

FORTUNE BRANDS HOME & SECURITY, INC.

(FBHS)
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Fortune Brands Home & Security : Q2 2021 Fortune Brands Earnings Release

07/28/2021 | 04:14pm EDT

EARNINGS RELEASE

FORTUNE BRANDS DELIVERS STRONG SALES AND PROFIT GROWTH IN 2Q 2021; COMPANY FURTHER INCREASES 2021 ANNUAL OUTLOOK BASED ON CONTINUED EXPECTED OUTPERFORMANCE IN A STRONG HOUSING MARKET

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

DEERFIELD, IL. July 28, 2021 - Fortune Brands Home & Security, Inc. (NYSE: FBHS, the "Company", or "Fortune Brands"), an industry-leading home and security products company, today announced second quarter 2021 results.

"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.

www.FBHS.com

EARNINGS RELEASE

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

www.FBHS.com

EARNINGS RELEASE

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."

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.comto learn more about FBHS, its brands and how the Company is accelerating its environmental, social and governance (ESG) commitments.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements" regarding general business strategies, market potential, future financial performance, the potential of our brands and the housing market, and other matters. Statements preceded by, followed by or that otherwise include the words "believes", "positioned", "expects", "estimates", "plans", "look to", "outlook", "intend", 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 the current plans and expectations of our management. 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. Important factors that could affect performance and cause results to differ materially from management's expectations, or could affect the Company's ability to achieve its strategic goals, include the uncertainties relating to the impact of COVID-19 on the Company's business, operations and employees and the other factors discussed in our securities filings, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission. The forward-looking statements included in this release are made as of the date hereof, and except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this release.

www.FBHS.com

EARNINGS RELEASE

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, net sales excluding impact of FX, net sales excluding LARSON net sales, operating margin before charges / gains, EBITDA before charges / gains, net debt, net debt to EBITDA before charges / gains, and free cash flow. These 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 most closely comparable GAAP measures, and reasons for the Company's use of these measures, are presented in the attached pages.

Source: Fortune Brands Home & Security, Inc.

INVESTOR CONTACT: Matthew Skelly 847-484-4573 Investor.Questions@FBHS.com

MEDIA CONTACT: Darwin Minnis

847-484-4204 Media.Relations@FBHS.com

www.FBHS.com

FORTUNE BRANDS HOME & SECURITY, INC.

(In millions, except per share amounts)

(Unaudited)

Net Sales

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

% Change

2021

2020

% Change

Net Sales (GAAP)

Net Sales (GAAP)

Plumbing

$

694.6

$

504.8

38

Plumbing

$

1,316.2

$

973.8

35

Outdoors & Security

535.5

332.3

61

Outdoors & Security

997.0

646.0

54

Cabinets

706.0

538.7

31

Cabinets

1,393.9

1,158.7

20

Total Net Sales

$

1,936.1

$

1,375.8

41

Total Net Sales

$

3,707.1

$

2,778.5

33

Current Quarter Operating Income

Before Charges & Gains

GAAP

Three Months Ended June 30,

Three Months Ended June 30,

Operating Income (Loss) Before Charges/Gains (a)

2021

2020

% Change

Operating Income (Loss)

2021

2020

% Change

Plumbing

$

169.0

$

123.5

37

Plumbing

$

168.9

$

109.5

54

Outdoors & Security

78.5

48.0

64

Outdoors & Security

78.5

45.2

74

Cabinets

76.9

44.2

74

Cabinets

74.4

37.3

99

Corporate expenses

(26.9)

(19.0)

(42)

Corporate expenses

(26.9)

(19.0)

(42)

Total Operating Income Before Charges/Gains

$

297.5

$

196.7

51

Total Operating Income (GAAP)

$

294.9

$

173.0

70

Earnings Per Share Before Charges/Gains (b)

Diluted EPS (GAAP)

Diluted

$

1.56

$

0.94

66

Diluted EPS

$

1.55

$

0.83

87

EBITDA Before Charges/Gains (c)

$

344.1

$

235.4

46

Net Income (GAAP)

$

217.2

$

116.2

87

Year to Date Operating Income

Before Charges & Gains

GAAP

Six Months Ended June 30,

Six Months Ended June 30,

Operating Income (loss) Before Charges/Gains (a)

2021

2020

% Change

Operating Income (loss)

2021

2020

% Change

Plumbing

$

318.4

$

227.9

40

Plumbing

$

316.8

$

214.0

48

Outdoors & Security

140.8

80.6

75

Outdoors & Security

131.3

76.7

71

Cabinets

151.4

99.9

52

Cabinets

147.0

81.0

81

Corporate expenses

(51.3)

(41.9)

(22)

Corporate expenses

(51.8)

(43.7)

(19)

Total Operating Income Before Charges/Gains

$

559.3

$

366.5

53

Total Operating Income (GAAP)

$

543.3

$

328.0

66

Earnings Per Share Before Charges/Gains (b)

Diluted EPS (GAAP)

Diluted

$

2.92

$

1.75

67

Diluted EPS

$

2.81

$

1.61

75

EBITDA Before Charges/Gains (c)

$

653.2

$

442.5

48

Net Income (GAAP)

$

395.0

$

225.0

76

(a) (b) (c) For definitions of Non-GAAP measures, see Definitions of Terms page

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Fortune Brands Home & Security Inc. published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2021 20:13:10 UTC.


© Publicnow 2021
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Sales 2021 7 562 M - -
Net income 2021 804 M - -
Net Debt 2021 1 915 M - -
P/E ratio 2021 16,6x
Yield 2021 1,09%
Capitalization 13 064 M 13 064 M -
EV / Sales 2021 1,98x
EV / Sales 2022 1,83x
Nbr of Employees 27 505
Free-Float 73,9%
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Mean consensus OUTPERFORM
Number of Analysts 17
Last Close Price 94,75 $
Average target price 116,47 $
Spread / Average Target 22,9%
EPS Revisions
Managers and Directors
Nicholas I. Fink Chief Executive Officer & Director
Patrick D. Hallinan Chief Financial Officer & Senior Vice President
Susan Saltzbart Kilsby Non-Executive Chairman
Marty Thomas Senior VP-Operations & Supply Chain Strategy
David M. Thomas Lead Independent Director
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