Fortune Brands Innovations, Inc 8-K, filed Apr 28, 2022

Fortune Brands Innovations, Inc. (FBIN)

8-K 2022-04-28 For: 2022-04-28

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Added on April 09, 2026

About this 8-K

Fortune Brands Innovations, Inc filed this 8-K on April 28, 2022.

Items reported

Item 2.02: Financial results
Item 5.02: Director or officer change, or executive pay
Item 7.01: Regulation FD disclosure
Item 8.01: Other events
Item 9.01: Financial statements and exhibits

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Delaware	1-35166	62-1411546
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		FBHS		New York Stock Exchange

Exhibit No.	Description

99.1	Press Release dated April 28, 2022, issued by Fortune Brands Home & Security, Inc.

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	FORTUNE BRANDS HOME & SECURITY, INC.
	(Registrant)



	By:	/s/ Patrick D. Hallinan
	Name:	Patrick D. Hallinan
	Title:	Senior Vice President and Chief Financial Officer


FORTUNE BRANDS HOME & SECURITY, INC.
(In millions, except per share amounts)
(Unaudited)

	Net sales
	Net sales

		Three Months Ended March 31,
		2022			2021			% Change
	Net sales (GAAP)
	Water Innovations	$	643.6		$	621.6		4
	Outdoors & Security		496.6			461.5		8
	Cabinets		777.1			687.9		13
	Total net sales	$	1,917.3		$	1,771.0		8

	Quarter operating income
	Quarter operating income

		Before Charges & Gains									GAAP

		Three Months Ended March 31,									Three Months Ended March 31,
	Operating income (loss) before charges/gains ^(a)	2022			2021			% Change		Operating income (loss)	2022			2021			% Change
	Water Innovations	$	150.1		$	149.4		-		Water Innovations	$	149.3		$	147.9		1
	Outdoors & Security		55.6			62.3		(11	)	Outdoors & Security		60.2			52.8		14
	Cabinets		73.6			74.5		(1	)	Cabinets		73.6			72.6		1
	Corporate expenses		(29.7	)		(24.4	)	22		Corporate expenses		(29.7	)		(24.9	)	19

	Total operating income before charges/gains	$	249.6		$	261.8		(5	)	Total operating income (GAAP)	$	253.4		$	248.4		2

	Earnings Per Share before charges/gains ^(b)									Diluted EPS (GAAP)
	Diluted	$	1.31		$	1.36		(4	)	Diluted EPS	$	1.34		$	1.26		6


	EBITDA before charges/gains ^(c)	$	297.7		$	309.1		(4	)	Net income (GAAP)	$	180.9		$	177.8		2


	(a) (b) (c) For definitions of Non-GAAP measures, see Definitions of Terms page

Fortune Brands Innovations, Inc 8-K, filed Apr 28, 2022

About this 8-K

Items reported

Fortune Brands Announces Intent to Separate Into Two World Class Publicly Traded Companies; Reports 1Q 2022 Results Ahead of Consensus and Raises Full-Year EPS Outlook While Maintaining Operational Guidance

Contacts


FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (GAAP)
(In millions)
(Unaudited)


		March 31,		December 31,
		2022		2021

	Assets
	Current assets
	Cash and cash equivalents	$	378.2	$	471.5
	Accounts receivable, net		1,011.6		885.7
	Inventories		1,334.7		1,193.8
	Other current assets		232.2		193.5
	Total current assets		2,956.7		2,744.5

	Property, plant and equipment, net		1,064.3		1,009.5
	Goodwill		2,487.5		2,465.1
	Other intangible assets, net of accumulated amortization		1,382.5		1,383.8
	Other assets		352.0		333.3
	Total assets	$	8,243.0	$	7,936.2


	Liabilities and equity
	Current liabilities
	Current portion of short term debt	$	-	$	400.0
	Accounts payable		728.1		764.9
	Other current liabilities		626.7		806.2
	Total current liabilities		1,354.8		1,971.1

	Long-term debt		3,367.9		2,309.8
	Deferred income taxes		196.4		176.0
	Other non-current liabilities		409.1		414.5
	Total liabilities		5,328.2		4,871.4

	Stockholders' equity		2,914.8		3,064.8
	Total equity		2,914.8		3,064.8
	Total liabilities and equity	$	8,243.0	$	7,936.2


FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)



		Three Months Ended March 31,
			2022			2021
	Operating activities
	Net income	$	180.9		$	177.8
	Depreciation and amortization		46.9			47.7
	Non-cash lease expense		10.9			10.7
	Deferred taxes		5.7			(0.1	)
	Gain on equity investments		-			2.9
	Other non-cash items		7.0			13.0
	Changes in assets and liabilities, net		(434.5	)		(321.2	)
	Net cash used in operating activities	$	(183.1	)	$	(69.2	)

	Investing activities
	Capital expenditures	$	(60.8	)	$	(25.4	)
	Proceeds from the disposition of assets		8.0			1.7
	Cost of acquisitions, net of cash acquired		(61.6	)		5.2
	Net cash used in investing activities	$	(114.4	)	$	(18.5	)

	Financing activities
	Increase in debt, net	$	660.5		$	110.0
	Proceeds from the exercise of stock options		0.2			10.6
	Treasury stock purchases		(377.1	)		(54.1	)
	Dividends to stockholders		(37.2	)		(36.0	)
	Other items, net		(43.2	)		(7.7	)
	Net cash provided by financing activities	$	203.2		$	22.8


	Effect of foreign exchange rate changes on cash	$	0.7		$	1.7

	Net decrease in cash and cash equivalents	$	(93.6	)	$	(63.2	)
	Cash, cash equivalents and restricted cash* at beginning of period		476.1			425.0
	*Cash, cash equivalents and restricted cash at end of period**	$	382.5		$	361.8



	FREE CASH FLOW	Three Months Ended March 31,						2022 Full Year
			2022			2021		Approximation

	Free cash flow**	$	(235.7	)	$	(82.3	)	$	625.0 - 700.0
	Add:
	Capital expenditures		60.8			25.4			375.0 - 425.0
	Less:
	Proceeds from the disposition of assets		8.0			1.7			7.0
	Proceeds from the exercise of stock options		0.2			10.6			10.0
	Cash flow from operations (GAAP)	$	(183.1	)	$	(69.2	)	$	983.0 - 1,108.0

	*Restricted cash of $1.3 million and $3.0 million is included in Other current assets and Other assets, respectively, as of March 31, 2022. Restricted cash of $1.1 million and $4.7 million is included in Other current assets and Other assets, respectively, as of March 31, 2021.

	** Free cash flow is cash flow from operations calculated in accordance with U.S. generally accepted accounting principles ("GAAP") less net capital expenditures (capital expenditures less proceeds from the disposition of assets including property, plant and equipment, and proceeds from the exercise of stock options). Free cash flow does not include adjustments for certain non-discretionary cash flows such as mandatory debt repayments. Free cash flow is a measure not derived in accordance with GAAP. Management believes that free cash flow provides investors with helpful supplemental information about the Company's ability to fund internal growth, make acquisitions, repay debt and related interest, pay dividends and repurchase common stock. This measure may be inconsistent with similar measures presented by other companies.


FORTUNE BRANDS HOME & SECURITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (GAAP)
(In millions, except per share amounts)
(Unaudited)

		Three Months Ended March 31,
		2022			2021		% Change

	Net sales	$	1,917.3		$	1,771.0	8

	Cost of products sold		1,237.8			1,126.9	10

	Selling, general
	and administrative expenses		409.5			371.5	10

	Amortization of intangible assets		16.0			16.6	(4	)

	Restructuring charges		0.6			7.6	(92	)

	Operating income		253.4			248.4	2

	Interest expense		21.8			21.4	2

	Other (income) expense, net		(1.3	)		3.3	(139	)

	Income before taxes		232.9			223.7	4

	Income tax		52.0			45.9	13

	Net income	$	180.9		$	177.8	2

	Diluted earnings per common share
	Net income	$	1.34		$	1.26	6

	Diluted average number of shares outstanding		134.7			140.6	(4	)


DILUTED EPS BEFORE CHARGES/GAINS RECONCILIATION

For the three months ended March 31, 2022, diluted EPS before charges/gains is net income calculated on a diluted per-share basis, excluding $3.8 million ($4.0 million after tax or $0.03 per diluted share) of net gains included in restructuring and other charges/gains.


For the three months ended March 31, 2021 diluted EPS before charges/gains is net income calculated on a diluted per-share basis, excluding $13.4 million ($10.0 million after tax or $0.08 per diluted share) of restructuring and other charges/gains and a loss on equity investment of $4.5 million ($3.4 million after tax or $0.02 per diluted share).




	Three Months Ended March 31,
	2022		2021			% Change

Earnings Per Common Share - Diluted
Diluted EPS before charges/gains ^(b)	$	1.31	$	1.36		(4	)

Restructuring and other (charges)/gains		0.03		(0.08	)	(138	)
Loss on equity investments ^(d)		-		(0.02	)	(100	)

Diluted EPS (GAAP)	$	1.34	$	1.26		6


(b) (d) For definitions of Non-GAAP measures, see Definitions of Terms page

FORTUNE BRANDS HOME & SECURITY, INC.
Reconciliation of Income Statements - GAAP to Before Charges/Gains Information
Three Months Ended March 31,
(In millions, except per share amounts)
(Unaudited)

				Before Charges/Gains Adjustments

				Restructuring		Loss on		Before
	GAAP			and other		equity		Charges/Gains
	(unaudited)			(charges)/gains		investment		(Non-GAAP)

2022	FIRST QUARTER

Net sales	$	1,917.3		-		-

Cost of products sold		1,237.8		5.4		-
Selling, general & administrative expenses		409.5		(1.0	)	-
Amortization of intangible assets		16.0		-		-
Restructuring (charges)/gains		0.6		(0.6	)	-

Operating income		253.4		(3.8	)	-			249.6

Interest expense		21.8		-		-
Other (income) expense, net		(1.3	)	-		-
Income before taxes		232.9		(3.8	)	-			229.1

Income tax		52.0		0.2		-

Net income		180.9		(4.0	)	-		$	176.9


Diluted average number of shares outstanding		134.7							134.7

Diluted EPS	$	1.34						$	1.31

2021

Net sales	$	1,771.0		-		-

Cost of products sold		1,126.9		(5.3	)	-
Selling, general & administrative expenses		371.5		(0.5	)	-
Amortization of intangible assets		16.6		-		-
Restructuring (charges)/gains		7.6		(7.6	)	-

Operating income		248.4		13.4		-			261.8

Interest expense		21.4		-		-
Other (income) expense, net		3.3		-		(4.5	)
Income before taxes		223.7		13.4		4.5			241.6

Income tax		45.9		3.4		1.1

Net income		177.8		10.0		3.4		$	191.2

Diluted average number of shares outstanding		140.6							140.6

Diluted EPS	$	1.26						$	1.36


FORTUNE BRANDS HOME & SECURITY, INC.
BEFORE CHARGES/GAINS OPERATING MARGIN TO OPERATING MARGIN
(Unaudited)

	Three Months Ended March 31,
	2022		2021		Change

WATER INNOVATIONS
Before charges/gains operating margin	23.3	%	24.0	%	(70) bps
Restructuring & other (charges)/gains	(0.1	%)	(0.2	%)
Operating margin	23.2	%	23.8	%	(60) bps

OUTDOORS & SECURITY
Before charges/gains operating margin	11.2	%	13.5	%	(230) bps
Restructuring & other (charges)/gains	0.9	%	(2.1	%)
Operating margin	12.1	%	11.4	%	70 bps

CABINETS
Before charges/gains operating margin	9.5	%	10.8	%	(130) bps
Restructuring & other (charges)/gains	-		(0.2	%)
Operating margin	9.5	%	10.6	%	(110) bps

TOTAL COMPANY
Before charges/gains operating margin	13.0	%	14.8	%	(180) bps
Restructuring & other (charges)/gains	0.2	%	(0.8	%)
Operating margin	13.2	%	14.0	%	(80) 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/gains 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.


FORTUNE BRANDS HOME & SECURITY, INC.
RECONCILIATION OF FULL YEAR 2022 GUIDANCE DILUTED EPS BEFORE CHARGES/GAINS TO GAAP DILUTED EPS
(Unaudited)

	Twelve Months Ending
	December 31, 2022		December 31, 2021			% Change

Diluted EPS before charges/gains - full year range	$	6.40 - 6.60	$	5.73		12 - 15

Diluted EPS before charges/gains ^(b)	$	6.50	$	5.73		13

Restructuring and other (charges)/gains		0.01		(0.17	)
Loss on equity investments ^(e)		-		(0.02	)
Tax items		0.09		-

Diluted EPS - (GAAP)	$	6.60	$	5.54		19

Diluted EPS - (GAAP) - full year range	$	6.50 - 6.70	$	5.54		17 - 21


For the twelve months ended December 31, 2021, diluted EPS before charges/gains is net income calculated on a diluted per-share basis excluding $28.1 million ($22.9 million after tax or $0.17 per diluted share) of restructuring and other charges/gains, including $2.2 million of mark-to-market expense classified in the other expense, net associated with the acquisition of the remaining outstanding shares of Flo, which occurred in January 2022, loss on equity investments of $4.5 million ($3.4 million net of tax or $0.02 per diluted share), the impact from actuarial losses associated with our defined benefit plans of $1.0 million ($0.7 million net of tax) and a net tax expense of $0.2 million.




(b) (e) For definitions of Non-GAAP measures, see Definitions of Terms page

	Definitions of Terms: Non-GAAP Measures

	(a) Operating income (loss) before charges/gains is operating income derived in accordance with GAAP, excluding restructuring and other charges/gains. Operating income (loss) before charges/gains is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the returns generated by the Company 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.

	(b) Diluted EPS before charges/gains is net income calculated on a diluted per-share basis, excluding restructuring and other charges/gains, loss on equity investments and tax items. Diluted EPS before charges/gains is a measure not derived in accordance with GAAP. Management uses this measure to evaluate the overall performance of the Company and 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.

	(c) EBITDA before charges/gains is net income derived in accordance with GAAP, excluding depreciation, amortization of intangible assets, restructuring and other charges/gains, interest expense, defined benefit plan actuarial losses and income taxes. EBITDA before charges/gains is a measure not derived in accordance with GAAP. Management uses this measure to assess returns generated by the Company. Management believes this measure provides investors with helpful supplemental information about the Company's ability to fund internal growth, make acquisitions and repay debt and related interest. This measure may be inconsistent with similar measures presented by other companies.

	(d) Loss on equity investments is related to our investment in Flo Technologies.


	Definitions of Terms: GAAP Measures

	In the first quarter of 2022, our Plumbing segment was renamed “Water Innovations” in order to better align with our key brands and organizational purpose. The Plumbing segment name change is to the name only and had no impact on the Company’s historical financial position, results of operations, cash flow or segment level results previously reported.

	In 2018 our Water Innovations segment entered into a strategic partnership with, and acquired non-controlling equity interests in, Flo Technologies, Inc. ("Flo"), a U.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. In January 2020, we entered into an agreement to acquire the remaining outstanding shares of Flo in a multi-phase transaction. As part of this agreement, we acquired a majority of Flo’s outstanding shares during 2020 and entered into a forward contract to purchase all remaining shares of Flo during the first quarter of 2022 for a price based on a multiple of Flo’s 2021 sales and adjusted earnings before interest and taxes. During the three months ended March 31, 2022, we made a final cash payment of $16.5 million to the legacy minority shareholders and it is classified in the Other financing, net line of the cash flow statement.

	In January 2022, we acquired 100% of the outstanding equity of Solar Innovations LLC and an affiliated entity (together, "Solar"), a leading producer of wide-opening exterior door systems and outdoor enclosures, for a total gross purchase price of approximately $63 million. The acquisition cost is subject to a final post-closing working capital adjustment. We financed the transaction using cash on hand and borrowings under our existing revolving credit facilities. Solar is part of the Outdoors & Security segment. Its complementary product offerings will support the segment’s outdoor living strategy.