FORTUNE BRANDS INNOVATIONS, INC. FORTUNE BRANDS HOME & SECURITY, INC.
RECONCILIATION OF OPERATING INCOME BEFORE CHARGES/GAINS TO GAAP OPERATING INCOME (In millions)
(Unaudited)
Three Months Ended, | Six Months Ended, | |||||||||||||||
June 30, 2021 | June 30, 2020 | $ Change | % Change | June 30, 2021 | June 30, 2020 | $ Change | % Change | |||||||||
PLUMBING | ||||||||||||||||
Operating income before charges/gains (a) | $ | 169.0 | $ | 123.5 | $ | 45.5 | 37 | $ | 318.4 | $ | 227.9 | $ | 90.5 | 40 | ||
Restructuring charges (b) | - | (2.9) | 2.9 | 100 | - | (3.2) | 3.2 | 100 | ||||||||
Other charges (b) | ||||||||||||||||
Cost of products sold | 0.1 | 0.1 | - | - | (1.4) | 0.6 | (2.0) | (333) | ||||||||
Selling, general and administrative expenses | (0.2) | 1.8 | (2.0) | (111) | (0.2) | 1.7 | (1.9) | (112) | ||||||||
Asset impairment charges (e) | - | (13.0) | 13.0 | 100 | - | (13.0) | 13.0 | 100 | ||||||||
Operating income (GAAP) | $ | 168.9 | $ | 109.5 | $ | 59.4 | 54 | $ | 316.8 | $ | 214.0 | $ | 102.8 | 48 | ||
OUTDOORS & SECURITY | ||||||||||||||||
Operating income before charges/gains (a) | $ | 78.5 | $ | 48.0 | $ | 30.5 | 64 | $ | 140.8 | $ | 80.6 | $ | 60.2 | 75 | ||
Restructuring charges (b) | - | (2.8) | 2.8 | 100 | (6.1) | (3.1) | (3.0) | (97) | ||||||||
Other charges (b) | ||||||||||||||||
Cost of products sold | - | - | - | - | (3.4) | (0.8) | (2.6) | (325) | ||||||||
Selling, general and administrative expenses | - | - | - | - | - | - | - | - | ||||||||
Asset impairment charge | - | - | - | - | - | - | - | - | ||||||||
Operating income (GAAP) | $ | 78.5 | $ | 45.2 | $ | 33.3 | 74 | $ | 131.3 | $ | 76.7 | $ | 54.6 | 71 | ||
CABINETS | ||||||||||||||||
Operating income before charges/gains (a) | $ | 76.9 | $ | 44.2 | $ | 32.7 | 74 | $ | 151.4 | $ | 99.9 | $ | 51.5 | 52 | ||
Restructuring charges (b) | (0.3) | (4.7) | 4.4 | 94 | (1.8) | (7.1) | 5.3 | 75 | ||||||||
Other charges (b) | ||||||||||||||||
Cost of products sold | (2.1) | (2.2) | 0.1 | 5 | (2.5) | (2.1) | (0.4) | (19) | ||||||||
Selling, general and administrative expenses | (0.1) | - | (0.1) | (100) | (0.1) | (0.2) | 0.1 | 50 | ||||||||
Asset impairment charges (e) | - | - | - | - | - | (9.5) | 9.5 | 100 | ||||||||
Operating income (GAAP) | $ | 74.4 | $ | 37.3 | $ | 37.1 | 99 | $ | 147.0 | $ | 81.0 | $ | 66.0 | 81 | ||
CORPORATE | ||||||||||||||||
General and administrative expense before charges/gains | $ | (26.9) | $ | (19.0) | $ | (7.9) | (42) | $ | (51.3) | $ | (41.9) | $ | (9.4) | (22) | ||
Restructuring charges (b) | - | - | - | - | - | (1.5) | 1.5 | 100 | ||||||||
Other charges (b) | ||||||||||||||||
Selling, general and administrative expenses | - | - | - | - | (0.5) | (0.3) | (0.2) | (67) | ||||||||
Corporate expense (GAAP) | $ | (26.9) | $ | (19.0) | $ | (7.9) | (42) | $ | (51.8) | $ | (43.7) | $ | (8.1) | (19) | ||
TOTAL COMPANY | ||||||||||||||||
Operating income before charges/gains (a) | $ | 297.5 | $ | 196.7 | $ | 100.8 | 51 | $ | 559.3 | $ | 366.5 | $ | 192.8 | 53 | ||
Restructuring charges (b) | (0.3) | (10.4) | 10.1 | 97 | (7.9) | (14.9) | 7.0 | 47 | ||||||||
Other charges (b) | ||||||||||||||||
Cost of products sold | (2.0) | (2.1) | 0.1 | 5 | (7.3) | (2.3) | (5.0) | (217) | ||||||||
Selling, general and administrative expenses | (0.3) | 1.8 | (2.1) | (117) | (0.8) | 1.2 | (2.0) | (167) | ||||||||
Asset impairment charges (e) | - | (13.0) | 13.0 | 100 | - | (22.5) | 22.5 | 100 | ||||||||
Operating income (GAAP) | $ | 294.9 | $ | 173.0 | $ | 121.9 | 70 | $ | 543.3 | $ | 328.0 | $ | 215.3 | 66 |
(a) (b) (e) For definitions of Non-GAAP measures, see Definitions of Terms page
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DILUTED EPS BEFORE CHARGES/GAINS RECONCILIATION
For the three months ended June 30, 2021, diluted EPS before charges/gains is net income less noncontrolling interests calculated on a diluted per-share basis, excluding $2.6 million ($1.9 million after tax or $0.01 per diluted share) of restructuring and other charges and a tax expense of $0.2 million.
For the six months ended June 30, 2021, diluted EPS before charges/gains is net income less noncontrolling interests calculated on a diluted per-share basis excluding $16 million ($11.9 million after tax or $0.09 per diluted share) of restructuring and other charges, loss on equity investments of $4.5 million ($3.4 million net of tax or $0.02 per diluted share) and a tax expense of $0.2 million.
For the three months ended June 30, 2020, diluted EPS before charges/gains is net income less noncontrolling interests calculated on a diluted per-share basis excluding $10.7 million ($8.0 million after tax or $0.05 per diluted share) of restructuring and other charges, an asset impairment charge of $13.0 million ($10.5 million after tax or $0.08 per diluted share), gain on equity investments of $4.4 million ($2.9 million net of tax, and $0.4 million of basis difference amortization, or $0.01 per diluted share) and a net tax benefit of $1.5 million ($0.01 per diluted share).
For the six months ended June 30, 2020, diluted EPS before charges/gains is net income less noncontrolling interests calculated on a diluted per-share basis excluding $16.0 million ($11.7 million after tax or $0.08 per diluted share) of restructuring and other charges, asset impairment charges of $22.5 million ($17.6 million after tax or $0.13 per diluted share), gain on equity investments of $11.0 million ($7.9 million net of tax, and $0.4 million of basis difference amortization, or $0.06 per diluted share) and a tax benefit of $2.1 million ($0.01 per diluted share).
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
Earnings Per Common Share - Diluted | ||||||||||||
Diluted EPS Before Charges/Gains (c) | $ | 1.56 | $ | 0.94 | 66 | $ | 2.92 | $ | 1.75 | 67 | ||
Restructuring and other charges | (0.01) | (0.05) | 80 | (0.09) | (0.08) | (13) | ||||||
Asset impairment charges (e) | - | (0.08) | 100 | - | (0.13) | 100 | ||||||
Gain (loss) on equity investments (f) | - | 0.01 | (100) | (0.02) | 0.06 | (133) | ||||||
Tax items | - | 0.01 | (100) | - | 0.01 | (100) | ||||||
Diluted EPS (GAAP) | $ | 1.55 | $ | 0.83 | 87 | $ | 2.81 | $ | 1.61 | 75 |
RECONCILIATION OF FULL YEAR 2021 EARNINGS GUIDANCE TO GAAP
The Company is targeting diluted EPS before charges/gains to be in the range of $5.65 to $5.85 per share. For the full year, on a GAAP basis, the Company is targeting diluted EPS to be in the range of $5.49 to $5.69 per share and including the full year impact of previously announced restructuring actions. Reconciliation of non-GAAP diluted EPS guidance to GAAP diluted EPS guidance cannot be provided without unreasonable efforts on a forward-looking basis due to 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 excluded from the diluted EPS before charges/gains. In addition, the Company's GAAP EPS range assumes the Company incurs no gains or losses associated with its defined benefit plans during 2021.
(c) (e) (f) For definitions of Non-GAAP measures, see Definitions of Terms page
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FORTUNE BRANDS HOME & SECURITY, INC.
(In millions) (Unaudited)
RECONCILIATION OF EBITDA BEFORE CHARGES/GAINS TO NET INCOME | |||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||
EBITDA BEFORE CHARGES/GAINS (d) | $ | 344.1 | $ | 235.4 | 46 | $ | 653.2 | $ | 442.5 | 48 | |||
Depreciation* | $ | (29.3) | $ | (27.6) | (6) | $ | (58.8) | $ | (55.1) | (7) | |||
Amortization of intangible assets | (16.0) | (10.3) | (55) | (32.6) | (20.6) | (58) | |||||||
Restructuring and other charges | (2.6) | (10.7) | 76 | (16.0) | (16.0) | 0 | |||||||
Interest expense | (21.2) | (22.2) | 5 | (42.6) | (44.3) | 4 | |||||||
Asset impairment charges (e) | - | (13.0) | 100 | - | (22.5) | 100 | |||||||
Equity in losses of affiliate | - | (2.0) | 100 | - | (2.3) | 100 | |||||||
Gain (loss) on equity investments (f) | - | 4.4 | (100) | (4.5) | 11.0 | (141) | |||||||
Income taxes | (57.8) | (37.8) | (53) | (103.7) | (67.7) | (53) | |||||||
Net Income (GAAP) | $ | 217.2 | $ | 116.2 | 87 | $ | 395.0 | $ | 225.0 | 76 |
- Depreciation excludes accelerated depreciation expense of ($2.2) million and ($3.8) million for the three and six months ended June 30, 2021, respectively. Depreciation excludes accelerated depreciation expense of ($2.2) million and ($1.9) million for the three and six months ended June 30, 2020, respectively. Included in the six months ended June 30, 2020, is a benefit relating to the reversal of previously recorded accelerated depreciation expense of $0.3 million for the three months ended March 31, 2020. Accelerated depreciation is included in restructuring and other charges.
CALCULATION OF NET DEBT-TO-EBITDA BEFORE CHARGES/GAINS RATIO | |||||||
As of June 30, 2021 | |||||||
Long-term debt ** | 2,608.3 | ||||||
Total debt | 2,608.3 | ||||||
Less: | |||||||
Cash and cash equivalents ** | 460.0 | ||||||
Net debt (1) | 2,148.3 | ||||||
For the twelve months ended June 30, 2021 | |||||||
EBITDA before charges/gains (2) (d) | 1,228.3 | ||||||
Net debt-to-EBITDA before charges/gains ratio (1/2) | 1.7 | ||||||
** Amounts are per the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2021. | |||||||
Six Months Ended | Six Months Ended | Twelve Months | |||||
December 31, | June 30, | Ended June 30, | |||||
2020 | 2021 | 2021 | |||||
EBITDA BEFORE CHARGES/GAINS (d) | $ | 575.1 | $ | 653.2 | $ | 1,228.3 | |
Depreciation*** | $ | (57.9) | $ | (58.8) | $ | (116.7) | |
Amortization of intangible assets | (21.4) | (32.6) | (54.0) | ||||
Restructuring and other charges | (17.2) | (16.0) | (33.2) | ||||
Interest expense | (39.6) | (42.6) | (82.2) | ||||
Equity in losses of affiliate | (5.3) | - | (5.3) | ||||
Gain (loss) on equity investments (f) | - | (4.5) | (4.5) | ||||
Defined benefit plan actuarial losses | (3.2) | - | (3.2) | ||||
Income taxes | (101.1) | (103.7) | (204.8) | ||||
Net Income (GAAP) | $ | 329.4 | $ | 395.0 | $ | 724.4 |
*** Depreciation excludes accelerated depreciation expense of ($6.6) million for the six months ended December 31, 2020. Accelerated depreciation is included in restructuring and other charges.
(d) (e) (f) For definitions of Non-GAAP measures, see Definitions of Terms page
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FORTUNE BRANDS HOME & SECURITY, INC.
BEFORE CHARGES/GAINS OPERATING MARGIN TO OPERATING MARGIN
(Unaudited)
Three Months Ended June 30, | ||||
2021 | 2020 | Change | ||
PLUMBING | ||||
Before charges/gains operating margin | 24.3% | 24.5% | (20) bps | |
Restructuring & other charges | - | (0.2%) | ||
Asset impairment charges | - | (2.6%) | ||
Operating margin | 24.3% | 21.7% | 260 bps | |
OUTDOORS & SECURITY | ||||
Before charges/gains operating margin | 14.7% | 14.4% | 30 bps | |
Restructuring & other charges | - | (0.8%) | ||
Operating margin | 14.7% | 13.6% | 110 bps | |
CABINETS | ||||
Before charges/gains operating margin | 10.9% | 8.2% | 270 bps | |
Restructuring & other charges | (0.4%) | (1.3%) | ||
Operating margin | 10.5% | 6.9% | 360 bps | |
TOTAL COMPANY | ||||
Before charges/gains operating margin | 15.4% | 14.3% | 110 bps | |
Restructuring & other charges | (0.2%) | (0.8%) | ||
Asset impairment charges | - | (0.9%) | ||
Operating margin | 15.2% | 12.6% | 260 bps |
Operating margin is calculated as operating income derived in accordance with GAAP divided by GAAP net sales. Before charges/gains operating margin is operating income derived in accordance with GAAP, excluding restructuring and other charges and asset impairment charges, divided by GAAP net sales. Before charges/gains operating margin is a measure not derived in accordance with GAAP.
Management uses this measure to evaluate the returns generated by FBHS 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.
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FORTUNE BRANDS HOME & SECURITY, INC.
BEFORE CHARGES/GAINS OPERATING MARGIN TO OPERATING MARGIN
(Unaudited)
Six Months Ended June 30, | ||||
2021 | 2020 | Change | ||
TOTAL COMPANY | ||||
Before charges/gains operating margin | 15.1% | 13.2% | 190 bps | |
Restructuring & other charges | (0.4%) | (0.6%) | ||
Asset impairment charges | - | (0.8%) | ||
Operating margin | 14.7% | 11.8% | 290 bps |
Operating margin is calculated as operating income derived in accordance with GAAP divided by GAAP net sales. Before charges/gains operating margin is operating income derived in accordance with GAAP excluding restructuring and other charges and asset impairment charges, divided by GAAP net sales. Before charges/gains operating margin is a measure not derived in accordance with GAAP.
Management uses this measure to evaluate the returns generated by FBHS 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.
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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 20:13:09 UTC.
