Financial Data and Key Metrics Changes - In Q4 2021, total sales increased by over 18%, with consolidated operating income rising by 7% and EPS growing by 6% [51][8][28] - For the full year 2021, sales reached $7.7 billion, up 26%, with operating income increasing by 30% to $1.1 billion [51][52] - The total company operating margin improved by 50 basis points to 14.6%, and EPS grew by 37% to $5.73 [52][51] Business Line Data and Key Metrics Changes - Plumbing: Q4 sales were $704 million, up 10%, with a full year growth of over 25%. Operating margin was 20.8% for Q4 and 22.9% for the full year [55][56][30] - Outdoors & Security: Q4 sales increased by 40% to $514 million, with full year sales at $2 billion, up 44%. Operating margin was 15.9% for Q4 and 14.9% for the full year [57][62][35] - Cabinets: Q4 sales rose by 14% to $745 million, with full year sales up 16% to $2.9 billion. Operating margin was 8.9% for Q4 and 10.1% for the full year [63][64] Market Data and Key Metrics Changes - Demand for home products remains strong, driven by demographic trends favoring new construction and repair and remodel activities [22][27] - The existing housing inventory in the U.S. is at an all-time low, contributing to rapid turnover and increased demand for home products [23][26] - The company expects continued strength in new construction and repair and remodel spending, supported by low interest rates and significant home equity wealth [26][27] Company Strategy and Development Direction - The company is focused on expanding its Fortune Brands Advantage capabilities, investing in innovation, and enhancing capacity to serve customers [7][10][17] - A digital transformation initiative is underway, with plans to develop a digital center of excellence to improve brand innovation and operational efficiency [17][19] - The acquisition of Solar Innovations aims to enhance the company's outdoor segment and integrate advanced door systems into its product offerings [37][112] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges such as supply chain disruptions and inflation, while maintaining strong demand for products [10][16] - The outlook for 2022 includes expected sales growth of 5.5% to 7.5% and EPS in the range of $6.35 to $6.55, reflecting confidence in market strength [70][71] - Management anticipates that inflation will be offset by pricing actions, with margin improvements expected in the second half of 2022 [88][77] Other Important Information - The company has made significant investments in capacity expansions and returned over $590 million to shareholders in 2021 [9][51] - The company is committed to advancing its environmental, social, and governance (ESG) initiatives, including carbon emission reduction goals [12][15] Q&A Session Summary Question: Can you provide insights on the shape of the year and customer orders? - Management noted robust demand continuing into 2022, with POS dollars showing strength at or slightly above 21% [83][84] Question: How should we think about pricing and cost impacts on margins? - Management indicated that over 90% of pricing actions are in place, with expectations for margin improvement from Q2 onwards [86][88] Question: What is driving the increase in CapEx for 2022? - The increase in CapEx is driven by the need to accommodate immediate growth and long-term objectives, including investments in decking and plumbing facilities [90][91]
Fortune Brands(FBIN) - 2021 Q4 - Earnings Call Transcript