Core Insights - Fortune Brands Innovations Inc (NYSE:FBIN) reported a slight revenue decline of 0.5% in Q3 2025, missing the Zacks Consensus Estimate of $1.18 billion [3][6] - Earnings per share (EPS) for Q3 2025 were $1.09, down from $1.16 in the previous year, and also missed the consensus estimate of $1.10 [4][6] - The stock price of FBIN is currently $48.84, reflecting a decrease of 1.51% [5][6] Financial Performance - For the quarter ending September 2025, the company reported revenue of $1.15 billion, which is a slight decline compared to the same period last year [3][6] - The negative surprise in revenue was 2.43%, impacting investor sentiment [3] - EPS decreased from $1.16 to $1.09 year-over-year, marking a negative surprise of 0.91% [4][6] Stock Performance - The current stock price of FBIN is $48.84, down by $0.75 or 1.51% [5][6] - The stock has fluctuated between a low of $48.46 and a high of $49.68 on the reporting day [5] - Over the past year, FBIN reached a high of $86.96 and a low of $47.21, with a market capitalization of approximately $5.87 billion [5]

Core Insights - Larson Manufacturing, a leader in storm doors and screen products for over 70 years, has launched a new website, larsondoors.com, aimed at enhancing the shopping experience for homeowners and DIY enthusiasts [1] Group 1 - The redesigned website offers a faster and more intuitive user experience [1] - Improved navigation, product information, and project resources are key features of the new site [1] - The new platform aims to simplify and enhance the process of purchasing storm doors [1]

Group 1 - The core viewpoint is a hold rating for Fortune Brands Innovation (FBIN) due to weakening demand in China, despite positive performance in the Water Innovation (WI) segment [1] - The Water Innovation segment is performing well, which is a positive aspect for the company [1] Group 2 - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing value investing principles [1]

Core Insights - Fortune Brands Innovations (FBIN) reported revenue of $1.15 billion for the quarter ended September 2025, reflecting a decrease of 0.5% year-over-year and a surprise of -2.43% compared to the Zacks Consensus Estimate of $1.18 billion [1] - Earnings per share (EPS) for the quarter was $1.09, down from $1.16 in the same quarter last year, with an EPS surprise of -0.91% against the consensus estimate of $1.10 [1] Financial Performance Metrics - Net Sales in the Outdoors segment were $344.5 million, slightly below the average estimate of $351.31 million, showing a year-over-year increase of +0.5% [4] - Net Sales in the Security segment reached $186.2 million, exceeding the average estimate of $181.83 million, with a year-over-year growth of +4.9% [4] - Net Sales in the Water segment amounted to $618.5 million, falling short of the average estimate of $641.45 million, representing a year-over-year decline of -2.6% [4] Operating Income Analysis - Non-GAAP Operating Income for the Water segment was $151.1 million, slightly below the average estimate of $151.78 million [4] - Non-GAAP Operating Income for the Outdoors segment was $53.4 million, compared to the average estimate of $59.48 million [4] - Non-GAAP Operating Income for the Security segment was $33.2 million, below the average estimate of $34.97 million [4] - Total Corporate Expenses were reported at -$31.5 million, better than the average estimate of -$41 million [4] Stock Performance - Shares of Fortune Brands Innovations have declined by -6.1% over the past month, contrasting with a +3.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Fortune Brands Innovations (FBIN) reported quarterly earnings of $1.09 per share, missing the Zacks Consensus Estimate of $1.1 per share, and down from $1.16 per share a year ago [1][2] - The company posted revenues of $1.15 billion for the quarter ended September 2025, which was 2.43% below the Zacks Consensus Estimate and a slight decrease from $1.16 billion year-over-year [3] - The stock has underperformed significantly, losing about 27.2% since the beginning of the year compared to a 17.2% gain in the S&P 500 [4] Earnings Performance - The earnings surprise for the recent quarter was -0.91%, while the previous quarter saw a positive surprise of +2.04% [2] - Over the last four quarters, the company has only surpassed consensus EPS estimates once [2][3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.04 on revenues of $1.12 billion, and for the current fiscal year, it is $3.78 on revenues of $4.54 billion [8] - The estimate revisions trend for Fortune Brands Innovations was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [7] Industry Context - Fortune Brands Innovations operates within the Zacks Building Products - Air Conditioner and Heating industry, which is currently ranked in the bottom 16% of over 250 Zacks industries [9] - The performance of the stock may be influenced by the overall outlook for the industry, as top-ranked industries tend to outperform the bottom-ranked ones by a significant margin [9]

Financial Data and Key Metrics Changes - In Q3 2025, sales were approximately flat at $1.1 billion, with a 1% increase when excluding China [4][14][25] - Operating income was $206 million, down 5% year-over-year, primarily due to lower volumes and higher costs [25][28] - Earnings per share (EPS) were $1.09, reflecting the impact of lower volumes and product mix [14][25] Business Line Data and Key Metrics Changes - **Water Segment**: Sales were $619 million, down 3% year-over-year, with operating income of $151 million and a margin of 24.4% [14][25][26] - **Outdoors Segment**: Sales were $345 million, roughly flat year-over-year, with operating income of $53 million and a margin of 15.5% [14][25][27] - **Security Segment**: Sales increased by 5% to $186 million, with operating income of $33 million and a margin of 17.8% [20][25][28] Market Data and Key Metrics Changes - The macroeconomic environment remains uneven, with cautious consumer sentiment and mixed signals in housing activity [9][10] - The U.S. housing market shows signs of stabilization, with recent rate cuts by the Federal Reserve leading to increased buyer interest [10][11] - Homeowners are increasingly interested in renovations, with 84% planning to renovate in the next 12 months [11][12] Company Strategy and Development Direction - The company is focused on leveraging its "Fortune Brands Advantage" capabilities to achieve sustained above-market growth [5][7] - The transformation into a tightly aligned operating company is expected to enhance performance and efficiency [6][7] - The company aims to fully offset tariff impacts through supply chain actions and strategic pricing [8][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform the market despite current challenges [5][9] - The outlook for the R&R market remains encouraging, driven by aging housing stock and deferred maintenance projects [11][12] - The company anticipates growth in 2026, supported by strategic execution and a strong brand portfolio [23][32] Other Important Information - The company has made significant progress in its headquarters transition, completing hiring commitments ahead of schedule [6][29] - Free cash flow for the quarter was $177 million, with full-year expectations of $400 million to $420 million [28][29] - The company is on track to reduce its China-based costs to around 10% of COGS by year-end [30][58] Q&A Session Summary Question: Pricing strategy outcomes and future outlook - Management highlighted a disciplined approach to pricing, successfully covering tariff impacts and focusing on market opportunities for volume growth [35][36][37] Question: Segment margin guidance changes - The decline in outdoor and security segment margins was attributed to lower seasonal inventory builds and increased R&D investments [41][42][43] Question: Digital business growth and future metrics - The digital business is on track to reach a $300 million annualized run rate, with a goal of $1 billion by 2030 [45][48][49] Question: Tariff dynamics and impacts - The anticipated tariff impact for 2025 is around $80 million, with a reduced annualized impact for 2026 in the low $200 million range [56][58]

Financial Performance - Q3 2025 reported net sales were $1,149.2 million, a decrease of 0.5% compared to Q3 2024[3] - Q3 2025 earnings per share (EPS) were $0.59, down 46% year-over-year; EPS before charges/gains was $1.09, a decrease of 6%[4] - Operating income (GAAP) for the thirteen weeks ended September 27, 2025, was $125.9 million, a decrease of 38.6% compared to $205.1 million for the same period in 2024[16] - Net income for the thirteen weeks ended September 27, 2025, was $70.8 million, a decline of 48.2% from $136.6 million in the same period last year[24] - Total operating income for the thirteen weeks ended September 27, 2025, was $125.9 million, down 38.6% from $205.1 million in the prior year[38] - Operating income before charges/gains for the thirteen weeks was $206.2 million, a decrease of 4.5% compared to $215.9 million in the same period last year[40] Segment Performance - Water Innovations segment reported net sales of $618.5 million, a decline of 2.6% from the previous year[5] - Security segment achieved net sales of $186.2 million, an increase of 4.9% year-over-year[5] - Water segment net sales decreased by 2.6% to $618.5 million, while Outdoors segment sales increased slightly by 0.5% to $344.5 million[38] - The Outdoors segment reported an operating margin of (1.5%) for the thirteen weeks ended September 27, 2025, a decline of 1840 basis points from 16.9% in the prior year[40] Cash Flow and Debt - The company generated $204.4 million in operating cash flow and $177.0 million in free cash flow during the quarter[6] - Net debt stood at $2.4 billion, with a net debt to EBITDA ratio of 2.7x[6] - Free cash flow for the thirty-nine weeks ended September 27, 2025, was $183.1 million, compared to $262.4 million for the same period in 2024[20] - Long-term debt increased to $2,654.5 million as of September 27, 2025, from $2,173.7 million as of December 28, 2024[18] Guidance and Projections - Full-year 2025 guidance for EPS before charges/gains has been narrowed to $3.70 to $3.80[7] - The company anticipates finishing the year near the low end of its prior net sales guidance of -2% to flat[7] - The U.S. market is expected to remain stable with a forecast of -4% to -2% for 2025[8] - Capital expenditures (Capex) are projected to be between $120 million and $130 million for 2025[9] Restructuring and Charges - The company incurred restructuring charges of $10.8 million for the thirteen weeks ended September 27, 2025, compared to $7.4 million in the same period of 2024, representing a 45.9% increase[16] - Restructuring charges increased by 45.9% to $10.8 million for the thirteen weeks ended September 27, 2025, compared to $7.4 million in the same period last year[25] - Other charges for the thirteen weeks ended September 27, 2025, were $19.4 million, significantly higher than $3.4 million in the same period of 2024[39] - Asset impairment charges of $50.1 million were recorded for the thirteen weeks ended September 27, 2025, with no comparable charges in the prior year[25] Asset and Liability Overview - Total current assets increased slightly to $2,010.2 million as of September 27, 2025, compared to $2,007.4 million as of December 28, 2024[18] - Total liabilities remained stable at $4,139.7 million as of September 27, 2025, compared to $4,139.8 million as of December 28, 2024[18] - Cash and cash equivalents decreased to $223.9 million as of September 27, 2025, from $381.1 million as of December 28, 2024[18] Miscellaneous - High variability and low visibility regarding gains and losses associated with defined benefit plans affect net debt to EBITDA and diluted EPS calculations[52] - Restructuring and other charges are excluded from operating margin and diluted EPS calculations, impacting cash conversion metrics[52] - Net sales excluding the impact of China sales increased by 1.1% for the thirteen weeks ended September 27, 2025[41] - The Company is unable to provide a reconciliation for certain forward-looking non-GAAP measures due to the inherent difficulty of forecasting various items[52]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Fortune Brands Innovations (FBIN) despite higher revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected to show earnings of $1.10 per share, reflecting a -5.2% change year-over-year, while revenues are projected at $1.18 billion, a 2% increase from the previous year [3]. - The consensus EPS estimate has been revised down by 0.55% over the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for FBIN is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.02% [12]. - The stock currently holds a Zacks Rank of 4, suggesting a sell rating, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, FBIN exceeded the expected earnings of $0.98 per share by delivering $1.00, resulting in a surprise of +2.04% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [14]. Industry Comparison - Another company in the same industry, Watsco (WSO), is expected to report earnings of $4.21 per share, reflecting a -0.2% year-over-year change, with revenues anticipated at $2.11 billion, down 2.2% from the previous year [18][19]. - Watsco's consensus EPS estimate has been revised down by 11.7% in the last 30 days, leading to an Earnings ESP of -5.53% and a Zacks Rank of 4 [19][20].

Group 1 - The core viewpoint is that Fortune Brands Innovations (NYSE: FBIN) has been assigned a hold rating due to weak performance and uncertain macroeconomic pressures affecting the stock [1] - The second quarter results for 2025 have been released, and the analysis indicates a mixed performance for the company [1] Group 2 - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing the importance of buying quality companies at a discount to their intrinsic value [1]

Core Insights - Fortune Brands Innovations reported Q2 2025 earnings that exceeded analyst forecasts, with non-GAAP EPS at $1.00 compared to the $0.96 consensus, and GAAP revenue at $1.20 billion versus the $1.19 billion estimate, despite a year-over-year decline in key metrics [1][2] - The company experienced a 14% decline in non-GAAP EPS and a 3% drop in GAAP revenue compared to the previous year, indicating ongoing business challenges [1][2] Financial Performance - Non-GAAP EPS for Q2 2025 was $1.00, down 14% from $1.16 in Q2 2024 [2] - GAAP revenue reached $1.20 billion, a 3% decrease from $1.24 billion in Q2 2024 [2] - Operating margin (non-GAAP) narrowed to 16.5%, down 0.9 percentage points from 17.4% in the prior year [2] - GAAP EPS was reported at $0.83, reflecting a 22% decline from $1.06 in Q2 2024 [2] - Free cash flow (GAAP) was $119 million [2] Business Overview and Strategic Focus - Fortune Brands Innovations specializes in branded products for water solutions, outdoor living, and security, with a portfolio that includes Moen, Larson, Thermatru, Master Lock, SentrySafe, and Yale [3] - The company emphasizes digital transformation, supply chain control, strong retailer partnerships, and ESG commitments as key business priorities [4] Segment Performance - The Water Innovations segment reported net sales of $647 million, a 2% decrease, but a 4% increase when excluding the impact of the China market [5] - The Outdoors segment saw revenue decline 3% to $379 million, with operating margins slipping by 350 basis points [6] - The Security segment experienced a 7% revenue decline to $178 million, with a 410 basis point drop in operating margin [7] Tariff and Restructuring Impact - The company faced increased restructuring charges of $13.7 million, up 251% from the prior year, due to plant consolidations and supply chain reconfiguration [8] - Management is working to mitigate the impact of tariffs, particularly in the Water and Security segments, with expectations for further effects into 2026 [8] Outlook and Guidance - The company updated its FY2025 guidance, expecting net sales to be flat to down 2% and adjusted EPS in the range of $3.75 to $3.95 [9] - Segment forecasts indicate a decline in Water Innovations revenue by 1% to 3%, Outdoors to be flat to up 2%, and Security to be down 1% to up 2% [9] - Management anticipates a 2% to 4% decline in global home product markets for the year [9]