Group 1 - Fortune Brands Innovations (FBIN) reported quarterly earnings of $0.66 per share, matching the Zacks Consensus Estimate, but down from $0.83 per share a year ago [1] - The company posted revenues of $1.03 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.39%, and down from $1.11 billion year-over-year [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times, but has not beaten consensus revenue estimates [2] Group 2 - The stock has declined approximately 20.5% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $1.25 billion, and for the current fiscal year, it is $4.11 on revenues of $4.66 billion [7] - The Zacks Industry Rank for Retail - Home Furnishings is currently in the bottom 15% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Financial Data and Key Metrics Changes - The company reported first-quarter sales of $1 billion, a decrease of 7% compared to Q1 2024, or down 5% organically when excluding the impact of China and foreign exchange [20][36] - Operating income was $135.8 million, down 19%, with an operating margin of 13.1% [37] - Earnings per share (EPS) for the quarter were $0.66 [21][37] Business Line Data and Key Metrics Changes - **Water Innovations**: Sales decreased by 10% or 7% organically, with operating income of $113.2 million, down 20%, and an operating margin of 20% [27][37] - **Outdoors**: Sales decreased by 3%, with operating income of $31.7 million, down 16%, and an operating margin of 10.4% [29][38] - **Security**: Sales decreased by 4%, with operating income of $23.2 million, down 13%, and an operating margin of 14.2% [32][39] Market Data and Key Metrics Changes - The company noted a soft demand environment, with point of sale (POS) excluding China down low single digits and reductions in wholesale inventories [20][21] - The spring selling season was slower due to cautious consumer behavior, particularly in the repair and remodel sector [19][20] Company Strategy and Development Direction - The company is focused on mitigating the impact of tariffs through supply chain opportunities, cost reduction activities, and strategic pricing actions [10][11] - A significant portion of the company's cost of goods sold (COGS) is sourced from the U.S. (60%) and North America (70%), providing a competitive advantage [14][42] - The company is consolidating its U.S. office associates into a new campus in Deerfield, Illinois, to enhance collaboration and innovation [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current uncertain environment and emphasized the importance of strategic priorities [10][47] - The company will not provide detailed full-year financial guidance due to uncertainty around consumer demand but will outline a framework for potential EPS scenarios [12][43] - Management expects to fully offset the anticipated $200 million tariff impact in 2025 through various mitigation strategies [12][44] Other Important Information - The company has made significant progress in reducing its reliance on China, with expectations that COGS from China will be around 10% by the end of the year [14][86] - The digital business is expected to generate around $300 million in sales in 2025, with strong momentum in the Flow business [23][24] Q&A Session Summary Question: How does the transformation effort and headquarters move progress? - Management described the transformation as being in its third phase, focusing on co-location to drive innovation and performance acceleration, with positive talent relocation outcomes [50][56] Question: How is the company planning to mitigate the tariff impacts? - Management expects to fully offset the $200 million in-year tariff impact through supply chain moves and pricing actions, with a significant portion of the annualized $525 million impact related to China [59][63] Question: How confident is the company in achieving $300 million in digital sales? - Management expressed confidence in the digital business's performance, highlighting strong growth in the Flow segment and new partnerships [68][70] Question: What is the strategy regarding e-commerce pricing and market share? - Management acknowledged a transition to a firmer pricing strategy in e-commerce, which may have temporarily impacted share but is aimed at long-term brand health [80][81]

Financial Data and Key Metrics Changes - The company reported first quarter sales of $1 billion, a decrease of 7% compared to Q1 2024, or down 5% organically when excluding the impact of China and foreign exchange [20][38] - Operating income was $136 million, with an operating margin of 13.1%, and earnings per share (EPS) were $0.66 [21][38] - The company expects to fully offset the anticipated $200 million tariff impact in 2025 through supply chain opportunities, cost reduction activities, and strategic pricing actions [12][44] Business Line Data and Key Metrics Changes - **Water Innovations**: Sales decreased by 10% or 7% organically, reflecting lower point of sale and inventory destocking [28][38] - **Outdoors**: Sales decreased by 3%, driven by low single-digit point of sale declines, but double-digit growth was noted in decking [30][39] - **Security**: Sales decreased by 4%, primarily due to soft point of sale and inventory reductions [31][40] Market Data and Key Metrics Changes - The company noted a softer market environment, with cautious consumer behavior impacting demand, particularly in the repair and remodel sector [19][20] - Inventory reductions were observed across channels, particularly in wholesale, as partners prepared for a softening environment [20][81] Company Strategy and Development Direction - The company is focused on mitigating the impact of tariffs, controlling costs, and driving strong brands and digital initiatives [33][34] - A significant consolidation of headquarters is underway to enhance collaboration and innovation, expected to be completed by the end of summer [8][58] - The company aims to leverage its North American manufacturing footprint to gain a competitive advantage, particularly against competitors sourcing from China [14][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current uncertain environment and emphasized the importance of strategic priorities [34][47] - The company is not providing detailed full-year financial guidance due to uncertainty around consumer demand but has outlined a framework for potential EPS scenarios [12][44] - Management highlighted the potential for market outperformance despite external challenges, driven by strong brand positioning and supply chain advantages [34][47] Other Important Information - The company has reduced its spend from China by over 60% since 2017 and expects to have only 10% of its cost of goods sold (COGS) from China by the end of the year [14][85] - The digital business is expected to generate around $300 million in sales in 2025, with significant momentum in the Flow product line [23][70] Q&A Session Summary Question: How does the transformation effort and headquarters move progress? - Management indicated that the transformation is in its third phase, focusing on co-location to drive innovation and performance acceleration, with positive talent relocation outcomes [51][56] Question: How is the company planning to offset the tariff impacts? - The company expects to fully offset the $200 million impact in 2025 through supply chain moves and pricing actions, with a significant portion of the annualized $525 million impact related to China [59][63] Question: What is the confidence level in achieving $300 million in digital sales? - Management expressed strong confidence in achieving the digital sales target, highlighting significant activations and new partnerships that drive value [68][72] Question: Can you provide more details on the e-commerce pricing strategy and share shifts? - The company is transitioning to a firmer pricing strategy in e-commerce to maintain competitiveness, acknowledging some short-term share loss for long-term brand health [79][80]

[First Quarter 2025 Results](index=1&type=section&id=First%20Quarter%202025%20Results) Fortune Brands' Q1 2025 results met margin and EPS expectations despite geopolitical and macroeconomic challenges, with net sales down 7% to $1.0 billion and organic sales down 5%, as the company implements strategies to offset 2025 tariffs [Overall Company Performance](index=1&type=section&id=Overall%20Company%20Performance) Fortune Brands' Q1 2025 results met margin and EPS expectations despite geopolitical and macroeconomic challenges, with net sales down 7% to $1.0 billion and organic sales down 5%, as the company implements strategies to offset 2025 tariffs Q1 2025 Financial Highlights (vs. Q1 2024, in millions, except percentages and EPS) | Metric | Q1 2025 GAAP | Change | Q1 2025 Non-GAAP | Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,033M | (7%) | $1,033M | (7%) | | **Operating Income** | $97.0M | (38%) | $135.8M | (19%) | | **Operating Margin** | 9.4% | (460) bps | 13.1% | (200) bps | | **EPS** | $0.42 | (45%) | $0.66 | (20%) | - Organic sales, excluding the impact of China and foreign exchange, decreased by **5%** compared to Q1 2024[4](index=4&type=chunk) - The company is implementing tariff mitigation strategies designed to fully offset anticipated 2025 tariff impacts[4](index=4&type=chunk) - Management expressed confidence in the company's long-term strategy and its ability to manage costs, cash, and outperform the market in an uncertain landscape[2](index=2&type=chunk) [Segment Results](index=2&type=section&id=Segment%20Results) All Fortune Brands' segments experienced year-over-year declines in Q1 2025 net sales and operating margins, with Water Innovations seeing the largest sales drop at 10% and all segments contracting margins before charges/gains Q1 2025 Segment Performance (vs. Q1 2024) | Segment | Reported Net Sales Change | Organic Net Sales Change | Operating Margin Before Charges/Gains | Margin Change (bps) | | :--- | :--- | :--- | :--- | :--- | | **Water Innovations** | (10%) | (10%) | 20.0% | (260) bps | | **Outdoors** | (3%) | (3%) | 10.4% | (160) bps | | **Security** | (4%) | (4%) | 14.2% | (160) bps | [Balance Sheet and Cash Flow](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Fortune Brands maintained a strong Q1 2025 balance sheet with net debt to EBITDA at 2.8x, despite negative seasonal operating and free cash flows, while repurchasing $175 million in shares Key Financial Position Metrics (as of Q1 2025 End, in millions/billions) | Metric | Value | | :--- | :--- | | Net debt | $2.6 billion | | Net debt to EBITDA before charges / gains | 2.8x | | Cash | $340 million | | Available under revolving credit facility | $970 million | - Cash flow was in line with expectations, with operating cash flow of **$(83.4) million** and free cash flow of **$(112.6) million**, driven by typical seasonality[7](index=7&type=chunk) - The company repurchased **$175 million** of its shares in Q1 2025, with a total of **$225 million** repurchased year-to-date as of May 6, 2025[7](index=7&type=chunk) [Outlook and Corporate Information](index=2&type=section&id=Outlook%20and%20Corporate%20Information) [2025 Full-Year Guidance](index=2&type=section&id=2025%20Full-Year%20Guidance) Fortune Brands is not providing detailed 2025 full-year guidance due to demand uncertainty, instead offering an EPS framework based on volume scenarios and focusing on tariff mitigation through sourcing, cost reduction, and pricing - The company is not providing detailed 2025 full-year guidance due to uncertainty around consumer demand and volumes[9](index=9&type=chunk) - Management will provide a framework for EPS before charges/gains scenarios based on different volume assumptions during the earnings call[9](index=9&type=chunk) - The company is confident in its long-term strategy, focusing on brand and innovation, and accelerating its digital strategy[9](index=9&type=chunk) [About Fortune Brands Innovations](index=3&type=section&id=About%20Fortune%20Brands%20Innovations) Fortune Brands Innovations, Inc. (NYSE: FBIN) is an innovation-focused leader in home products, security, and commercial building markets, featuring a portfolio of prominent brands including Moen and Master Lock - The company is a brand, innovation, and channel leader in the home products, security, and commercial building markets[14](index=14&type=chunk) - Key brands in the portfolio include Moen, House of Rohl, Aqualisa, SpringWell, Therma-Tru, Larson, Fiberon, Master Lock, SentrySafe, and Yale residential[14](index=14&type=chunk) [Forward-Looking Statements and Non-GAAP Measures](index=3&type=section&id=Forward-Looking%20Statements%20and%20Non-GAAP%20Measures) This section provides cautionary forward-looking statements, detailing risks like market conditions and tariffs, and explains the use of non-GAAP financial measures as supplemental information with provided reconciliations - Forward-looking statements are based on current expectations and are subject to numerous risks and uncertainties, including reliance on housing market activity, competition, supply chain risks, and trade tariffs[15](index=15&type=chunk) - The report uses non-GAAP measures like diluted EPS before charges/gains, organic sales, and free cash flow to provide supplemental information. These are reconciled to comparable GAAP measures within the report[17](index=17&type=chunk) [Financial Statements and Reconciliations](index=5&type=section&id=Financial%20Statements%20and%20Reconciliations) [Consolidated Financial Statements (GAAP)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(GAAP)) Fortune Brands' unaudited Q1 2025 GAAP financial statements report total assets of $6.58 billion, net income of $51.4 million on $1.03 billion in net sales, and diluted EPS of $0.42, with net cash used in operating activities at $(83.4) million [Condensed Consolidated Statements of Income (GAAP)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(GAAP)) Q1 2025 Income Statement Summary (in millions, except EPS) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net sales** | $1,033.1 | $1,109.6 | | **Operating income** | $97.0 | $155.4 | | **Net income** | $51.4 | $96.4 | | **Diluted EPS** | $0.42 | $0.76 | [Condensed Consolidated Balance Sheets (GAAP)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(GAAP)) Balance Sheet Summary (in millions) | Metric | March 29, 2025 | Dec 28, 2024 | | :--- | :--- | :--- | | **Total current assets** | $2,062.0 | $2,007.4 | | **Total assets** | $6,584.8 | $6,561.8 | | **Total current liabilities** | $1,461.9 | $1,602.3 | | **Total liabilities** | $4,280.2 | $4,139.8 | | **Total equity** | $2,304.6 | $2,422.0 | [Condensed Consolidated Statements of Cash Flows (GAAP)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(GAAP)) Q1 Cash Flow Summary (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $(83.4) | $(71.3) | | **Net cash used in investing activities** | $(29.2) | $(169.8) | | **Net cash provided by financing activities** | $68.0 | $238.7 | | **Free cash flow** | $(112.6) | $(135.9) | [Reconciliations of Non-GAAP Measures](index=5&type=section&id=Reconciliations%20of%20Non-GAAP%20Measures) This section details reconciliations for key non-GAAP metrics, showing Q1 2025 Operating Income Before Charges/Gains at $135.8 million, Diluted EPS Before Charges/Gains at $0.66, and a 5% decline in organic sales (ex-China and FX) [Reconciliation of Operating Income Before Charges/Gains](index=5&type=section&id=Reconciliation%20of%20Operating%20Income%20Before%20Charges%2FGains) Q1 2025 Reconciliation of Operating Income (in millions) | Description | Total Company | Water | Outdoors | Security | | :--- | :--- | :--- | :--- | :--- | | **Operating income (GAAP)** | $97.0 | $103.2 | $22.6 | $16.0 | | Restructuring charges | $24.8 | $9.6 | $2.5 | $3.9 | | Other charges/(gains) | $14.0 | $0.4 | $6.6 | $3.3 | | **Operating income before charges/gains** | $135.8 | $113.2 | $31.7 | $23.2 | [Reconciliation of Diluted EPS Before Charges/Gains](index=10&type=section&id=Reconciliation%20of%20Diluted%20EPS%20Before%20Charges%2FGains) Q1 2025 Reconciliation of Diluted EPS | Description | Per Share Amount | | :--- | :--- | | **Diluted EPS from continuing operations (GAAP)** | $0.42 | | Restructuring charges | $0.14 | | Other charges/(gains) | $0.10 | | **Diluted EPS before charges/gains** | $0.66 | [Calculation of Net Debt-to-EBITDA Before Charges/Gains Ratio](index=9&type=section&id=Calculation%20of%20Net%20Debt-to-EBITDA%20Before%20Charges%2FGains%20Ratio) - As of March 29, 2025, the Net Debt-to-EBITDA before charges/gains ratio was **2.8x**, based on **$2.61 billion** in net debt and **$929.9 million** in trailing fifty-two week EBITDA before charges/gains[30](index=30&type=chunk)[31](index=31&type=chunk) [Reconciliation of Organic Net Sales](index=13&type=section&id=Reconciliation%20of%20Organic%20Net%20Sales) Q1 2025 Reconciliation of Net Sales Growth (%) | Description | Total Company | | :--- | :--- | | **Percentage change in net sales (GAAP)** | (7%) | | Excluding Acquisitions | (0%) | | Excluding China sales | 1% | | Excluding FX | 1% | | **Organic sales excluding impact of China and FX** | (5%) | [Definitions of Terms: Non-GAAP Measures](index=14&type=section&id=Definitions%20of%20Terms%3A%20Non-GAAP%20Measures) This section defines the non-GAAP financial measures used in the report. Management believes these measures, such as Operating Income before charges/gains, Diluted EPS before charges/gains, and EBITDA before charges/gains, provide helpful supplemental information regarding the company's underlying performance and ability to fund growth and repay debt - Operating income before charges/gains excludes restructuring and other charges to evaluate returns generated by the company and its segments[40](index=40&type=chunk) - Diluted EPS before charges/gains excludes restructuring and other charges to evaluate the company's overall underlying performance from period to period[41](index=41&type=chunk) - EBITDA before charges/gains is used to assess returns and the company's ability to fund internal growth, make acquisitions, and repay debt[42](index=42&type=chunk)

Core Insights - Moen has launched an Insurance Partner Program aimed at reducing water damage claims for insurance providers of all sizes, allowing them to offer the Moen® Flo Smart Water Monitor and Shutoff to policyholders at no cost [1][2][3] Group 1: Program Details - The program is designed to help insurance providers limit water damage claims, which cost insurers over $15 billion annually [1][2] - Insurance providers can sign up for the program for free and promote the benefits of water leak prevention to their policyholders [2][4] - The Flo Smart Water Monitor and Shutoff can reduce water damage claim events by 96%, as evidenced by a 2020 study [3][4] Group 2: Product Features - The device continuously monitors water pressure and flow, detecting leaks as small as a drop per minute [3] - It sends alerts through the Moen Smart Water Network App and can automatically shut off water in case of a catastrophic leak [3] - Homeowners can track water usage and set conservation goals through the app [3] Group 3: Implementation Process - Providers can easily get started by signing up for a free informational webinar and completing an online application [4][7] - Policyholders are responsible for paying for the device and installation, while Moen manages the rest of the process [7] - Moen assigns an account manager to support providers and holds monthly Q&A sessions [7] Group 4: Company Background - Moen is the leading consumer faucet brand in North America, offering a wide range of innovative products for residential applications [5] - The company is part of Fortune Brands Innovations, Inc., which focuses on various home products and commercial building markets [6][8]

Core Insights - Moen has partnered with Liberty Mutual Insurance to offer discounts on the Flo Smart Water Monitor and Shutoff devices, aiming to reduce water damage claims and waste significantly [1][2] Company Overview - Moen is recognized as the leading consumer faucet brand in North America, providing a wide range of innovative products for kitchen and bath applications, including leak detection solutions [6] - The company is part of Fortune Brands Innovations, Inc., which focuses on various home products and security markets [7] Industry Context - Water damage claims are a significant financial burden for insurers, with over $15 billion paid out annually, and these claims account for 24% of all homeowner insurance claims [2][8] - The initiative aims to address the estimated one trillion gallons of water wasted annually in the U.S. due to leaks, highlighting a growing concern for water conservation [3][8] Product Features - The Flo Smart Water Monitor and Shutoff continuously monitors water pressure and flow, detecting leaks as small as a drop per minute, and can automatically shut off water to prevent major damage [4] - Users can track water usage and set conservation goals through the Moen Smart Water Network App, enhancing water-saving efforts [4]

Core Insights - Moen has launched the Hot Water Savings Handheld showerhead, which can reduce shower water usage by over a third and save up to 5,500 gallons annually without compromising the shower experience [1][3]. Product Features - The showerhead features a CONSERVE button that, when activated, reduces water flow to a trickle once the water reaches 95°F, maintaining temperature while minimizing water waste [3][5]. - It offers five high-performance spray settings and incorporates Moen's Magnetix™ technology for easy handling and secure docking, made from recycled ocean plastic [4][5]. Sustainability Commitment - The Hot Water Savings Handheld meets EPA WaterSense® criteria, emphasizing Moen's commitment to sustainability and eco-conscious solutions [3][5]. - The product aligns with the Mission Moen initiative, which focuses on conserving water as a precious resource [5]. Company Overview - Moen is a leader in home water experiences, providing a wide range of innovative kitchen and bath products that enhance user interaction with water [6]. - The company is part of Fortune Brands Innovations, Inc., which encompasses various brands in home products and security markets [7].

Financial Performance - For the year ended December 28, 2024, total net sales were $4,609.0 million, a decrease of 0.4% compared to 2023[130]. - Operating income increased by 20.0% to $737.9 million in 2024, primarily due to acquisitions and cost deflation[138]. - The Water segment reported net sales of $2,564.6 million, a slight increase of 0.1% from 2023[138]. - International market sales declined by $136.7 million, impacting overall net sales negatively[135]. - Net sales decreased by $96.8 million, or 2.0%, primarily due to lower sales unit volume in the U.S. and unfavorable foreign exchange of approximately $24 million[159]. - Operating income decreased by $159.4 million, or 20.6%, attributed to lower sales unit volume, manufacturing inefficiencies, and higher restructuring costs[165]. - Net sales in the Water segment decreased by $8.0 million, or 0.3%, due to lower organic sales unit volume and unfavorable foreign exchange of approximately $24.4 million[172]. - Operating income in the Outdoors segment decreased by $60.7 million, or 31.3%, due to asset impairment charges of $33.5 million and lower net sales[175]. - Net sales in the Security segment increased by $87.5 million, or 13.8%, primarily due to the acquisition of the Yale and August Business[176]. Expenses and Costs - Selling, general and administrative expenses rose by 6.1% to $1,226.5 million, driven by acquisitions and increased marketing costs[142]. - Selling, general and administrative expenses increased by $90.5 million, or 8.4%, due to the impact from the acquisition of the Acquired Businesses and higher headcount-related costs[161]. - Corporate expenses increased by $25.4 million, or 19.6%, primarily due to costs related to the acquisition of the Acquired Businesses[178]. - Interest expense decreased by $2.7 million, or 2.3%, due to lower interest on floating rate debt[166]. Acquisitions and Investments - The acquisition of Wise Water Solutions LLC. was completed for $105.6 million, contributing to the Water segment's performance[127]. - The company plans to continue investing in organic growth initiatives and strategic acquisitions to enhance shareholder value[131]. - The company acquired SpringWell for $105.6 million in February 2024, and the results are reported as part of the Water segment[196]. - The company completed the acquisition of the Acquired Businesses from ASSA for approximately $813.9 million in June 2023[197]. - The company invested approximately $60 million in incremental capacity in 2024 and expects capital spending in 2025 to be between $100 million and $140 million[191]. Cash Flow and Debt - The net cash provided by operating activities was $667.8 million in 2024, a decrease of $388.0 million from 2023[201]. - The company used $302.9 million in investing activities in 2024, significantly lower than $1,037.8 million in 2023, primarily due to lower acquisition costs[202]. - The company had aggregate outstanding notes of $2.7 billion as of December 30, 2023[184]. - The company entered into a $1.25 billion revolving credit facility with a maturity date of August 2027, with no outstanding borrowings as of December 28, 2024[185]. - As of December 28, 2024, the company had cash and cash equivalents of $381.1 million, with $335.4 million held at non-U.S. subsidiaries[191]. - Debt payments due in the next five years include $500 million in 2025 and $1.5 billion in 2030 and beyond[210]. Tax and Liabilities - The effective income tax rate for 2024 was adversely affected by state and local taxes and foreign income taxed at higher rates[148]. - As of December 28, 2024, liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaled $25.2 million, with a reasonable possibility of a decrease by $6.1 million in the next 12 months[241]. - The company has contractual obligations of $545.1 million as of December 28, 2024, with $522.4 million due within one year[207]. Pension and Actuarial Information - The weighted-average long-term expected rate of return on pension plan assets was 7.3% for 2024, compared to 6.1% for 2023[235]. - The weighted-average discount rate for defined benefit liabilities was 5.7% as of December 28, 2024, compared to 5.0% as of December 30, 2023[236]. - Total pension cost for 2024 was $11.6 million, with an actuarial loss component of $18.5 million[238]. - The actual gain on plan assets in 2024 was 0.3%, compared to an actuarial assumption of an average 7.3% expected return[238]. - A 25 basis point change in the discount rate assumption would lead to an increase or decrease in pension and postretirement liability of approximately $6 million[239]. - The assumed rate of increase for postretirement medical and prescription drugs for pre-65 retirees decreased from 7.3% in 2023 to 7.1% in 2024[237]. Inventory and Impairments - Inventory provision was $69.3 million and $75.8 million as of December 28, 2024, and December 30, 2023, respectively[216]. - No material impairments related to long-lived assets were recorded in 2024, 2023, or 2022[218]. - Pre-tax impairment charges of $28.0 million and $5.5 million were recorded for two indefinite-lived tradenames in the Outdoors segment during the fourth quarter of 2023[229]. - The fair value of indefinite-lived tradenames was $518.8 million as of December 28, 2024, with $215.6 million in the Water segment, $271.2 million in the Outdoors segment, and $32.0 million in the Security segment[228].

Group 1 - The core thesis for investing in Fortune Brands Innovations (NYSE: FBIN) is based on the expectation that FY25 will be a growth year due to an improved outlook for the housing market [1] - The investment strategy focuses on identifying undervalued companies with long-term growth potential, emphasizing a blend of value investing principles and long-term growth [1] - The approach involves purchasing quality companies at a discount to their intrinsic value and holding them to allow for compounding of earnings and shareholder returns [1]

Financial Data and Key Metrics Changes - For Q4 2024, net sales were $1.1 billion, a 5% decrease compared to Q4 2023, impacted by a third-party software outage, hurricanes, and softness in China [17][66] - Adjusted for these impacts, Q4 organic sales were down 1%, while EPS for Q4 were $0.98, a 3% increase from Q4 2023 [18][66] - Full-year 2024 net sales were $4.6 billion, flat compared to 2023, with full-year organic sales down 5% or 2% excluding China and the one-time disruption [19][66] - Full-year operating margins increased by 90 basis points to 16.9%, with EPS at $4.12, up 5% over 2023 [21][66] - Free cash flow for 2024 was approximately $475 million, with a cash conversion of over 100% of net income [20][66] Business Line Data and Key Metrics Changes Water Innovations - Q4 sales were $645 million, down 3%, but organic sales were up 2% when excluding China and hurricane impacts [67][68] - Full-year sales were flat, with organic sales down 2% excluding the same impacts, and operating margin at 23.7% for Q4 [68][69] Outdoors - Q4 sales were $303 million, down 2%, while full-year sales were up 1% [72][73] - Operating margin for the outdoor segment was 18.2% in Q4, an increase of 430 basis points [73] Security - Q4 sales were $157 million, down 17%, or down 10% when adjusting for the software outage [55][75] - Full-year sales decreased 4% to $694 million, with organic sales down around 10% when adjusting for the outage [75][76] Market Data and Key Metrics Changes - The overall market for the company's products is expected to remain dynamic, with the R&R market stabilizing but still negative [38][41] - The single-family new construction market is expected to be flat in 2025, with incomplete low single-digit growth anticipated [39] Company Strategy and Development Direction - The company is focusing on high-growth and profitable opportunities, simplifying its organization, and enhancing its digital business [8][10] - Strategic investments in brand building, innovation, and digital transformation are expected to drive future growth [10][12] - The company aims to leverage its digital capabilities and partnerships to enhance sales and market presence [27][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform in 2025 and beyond, despite a challenging macro environment [10][16] - The company is preparing for potential supply chain disruptions and has reduced tariff exposure from China [34][35] - Management highlighted the importance of brand strength and innovation in navigating current market challenges [36][37] Other Important Information - The board approved a new $1 billion share repurchase authorization, reflecting confidence in cash generation and long-term shareholder value [22] - The company has made significant progress in its digital business, with 214 million in digital sales and a strong user base growth [23][24] Q&A Session Summary Question: What are the expectations for the digital business in 2025? - Management expects digital sales to contribute significantly to growth, with a path towards $100 million in annualized sales for the Flow business in 2025 [27][30] Question: How is the company addressing the challenges in the security segment? - Management acknowledged the performance issues in the security segment and outlined plans for improvement, including a major branding campaign for Master Lock [56][78]