Fortune Brands(US:FBIN)2023-02-27 16:00Financial Performance - For the year ended December 31, 2022, total net sales were $4,723.0 million, a decrease of 1.6% compared to 2021[114]. - Operating income for 2022 was $774.3 million, down 4.5% from 2021, primarily due to lower net sales and higher commodity costs[129]. - Income from continuing operations decreased by $19.8 million, or 3.5%, due to lower net sales and higher interest expense, partially offset by higher other income and lower tax expense[140]. - Income from discontinued operations decreased by $65.9 million, or 31.0%, due to lower operating income and transaction costs related to the Separation[141]. - The company reported a foreign exchange impact of approximately $41 million on net sales and $12 million on operating income in 2022[130]. Sales Breakdown - The U.S. market accounted for 80% of net sales, with $3,763.6 million, while international sales contributed 20%[114]. - The Water Innovations segment reported net sales of $2,570.2 million, a decrease of 6.9% from 2021, while the Outdoors & Security segment saw a 5.5% increase to $2,152.8 million[129]. - Net sales in the Water Innovations segment decreased by $191.0 million, or 6.9%, attributed to slowing housing market activity in China and lower sales demand in the U.S. and Canada[142]. Acquisitions and Spin-offs - In December 2022, the company announced an agreement to acquire Emtek and Schaub for $800 million, expected to close in Q2 2023[121][122]. - The company completed the spin-off of its Cabinets business, MasterBrand, in December 2022, changing its name to Fortune Brands Innovations, Inc.[125]. Debt and Interest Expenses - Interest expense increased by 41.4% to $34.9 million due to higher average interest rates and borrowings[136]. - The company issued $900 million in senior unsecured notes in March 2022 to pay down a portion of the outstanding balance on the 2021 Term Loan[169]. - As of December 31, 2022, total long-term debt was $2,074.3 million, down from $2,309.8 million in 2021[176]. - Debt payments due in 2023 are $600 million, with a total of $1,600 million due in 2028 and beyond[197]. - Interest payments due in 2023 are $105 million, increasing to $642 million in 2028 and beyond[197]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $566.3 million in 2022, a decrease from $688.7 million in 2021[188]. - Net cash used in investing activities increased to $455.5 million in 2022, primarily due to acquisitions and capital expenditures[189]. - The Company expects capital spending in 2023 to be between $250 million and $300 million, focusing on decking product line investments[177]. Corporate Expenses and Income - Corporate expenses increased by $19.4 million, or 17.3%, due to higher consulting costs related to digital transformation initiatives[147]. - Other income increased to $12 million in 2022 from an expense of $0.4 million in 2021, primarily due to the absence of a non-cash loss related to the investment in Flo and higher defined benefit income[137]. Pension and Tax Liabilities - The fair value of total pension plan assets was $482.5 million as of December 31, 2022, covering 89% of the accumulated benefit obligation[192]. - The company recorded total pension income of $(7.8) million in 2022 compared to $(6.6) million in 2021[227]. - The company had liabilities for unrecognized tax benefits totaling $33.4 million as of December 31, 2022, with a potential decrease of $9.8 million in the next 12 months[232]. Impairments and Provisions - Impairment charges of $46.4 million were recognized in 2022 related to indefinite-lived tradenames within the legacy Cabinets segment[221]. - The inventory provision was $49.2 million as of December 31, 2022, up from $37.1 million in 2021[204]. - No impairments of long-lived assets were recorded in 2022, while a $0.2 million impairment was recorded in 2021[206].