FBIN

Fortune Brands’ second quarter reflected ongoing efforts to realign the business and address operational challenges, as management highlighted continued service and supply chain issues, particularly in the Water segment. CEO Jesse Singh, new to the role, noted that “our results over the last few years have lagged our potential,” attributing underperformance to internal complexity and conflicting priorities. Management cited initiatives to simplify the organization, enhance service, and accelerate new product development as central to improving execution and long-term profitability. The market response to the results was muted, with no significant reaction following the release. Is now the time to buy FBIN? Find out in our full research report (it’s free). Revenue: $1.15 billion vs analyst estimates of $1.16 billion (4.1% year-on-year decline, in line) Adjusted EPS: $1.35 vs analyst estimates of $0.82 (63.8% beat) Adjusted EBITDA: $277.5 million vs analyst estimates of $196.4 million (24% margin, 41.3% beat) Operating Margin: -0.8%, down from 14.3% in the same quarter last year Market Capitalization: $5.73 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Keith Hughes (Truist Securities) asked CEO Jesse Singh about the biggest opportunities and challenges facing the company after his first month. Singh highlighted growth potential in connected products and material conversion, but emphasized the need to simplify organization and improve core service levels. Matthew Bouley (Barclays) questioned the timing and impact of cost structure changes and investments. Singh and COO David Barry noted that progress on cost realignment and resourcing will take time, with substantial benefits expected into 2027 as investments in service and efficiency are realized. Susan Maklari (Goldman Sachs) sought clarification on the drivers behind revised earnings guidance. Singh cited increased investment in customer service and product development as the main factors, with Barry adding that near-term volume losses are tied to prioritizing service over sales promotions. Michael Dahl (RBC Capital Markets) asked for more detail on where incremental investments are being directed. Barry explained that most spending is focused on Water service improvements and supporting new product launches in Security and Outdoors, while Singh elaborated on steps being taken to stabilize supply chain processes. Philip Ng (Jefferies) inquired about channel partner feedback and opportunities in underpenetrated segments. Singh pointed to strong brand relevance and identified opportunities to expand in repair and remodel channels, particularly for Water and Doors, where the company sees room for growth. Looking ahead, key areas to watch include (1) the pace of operational improvements and service recovery in the Water segment, (2) execution and early sales results from new product launches in Security and Outdoors, and (3) outcomes from the strategic review of the Fiberon business and any portfolio optimization actions. Additional attention will be paid to the company’s ability to manage inflation and commodity cost pressures while maintaining progress on cost structure changes. Fortune Brands currently trades at $49.29, down from $52.73 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5 p.m. ET Vice President, Finance, and Investor Relations - Curt Worthington Chief Executive Officer - Jesse Singh Chief Operating Officer - David Barry Interim Chief Financial Officer - Ashley George Operator: Greetings, and welcome to the Fortune Brands Innovations Second Quarter 2026 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Curt Worthington, Vice President, Finance, and Investor Relations. Thank you. You may begin. Curt Worthington: Good afternoon, everyone, and welcome to the Fortune Brands Innovations Second Quarter 2026 Earnings Call. Hopefully, everyone has had a chance to review our earnings release. The earnings release, earnings presentation, and audio replay of this call can be found on the Investors section of our fbin.com website. I want to remind everyone that the forward-looking statements we make on the call today, either in our prepared remarks or in the associated question-and-answer session, are based on current expectations and market outlook and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. These risks are detailed in our various filings with the SEC. The company does not undertake any obligation to update or revise any forward-looking statements, except as required by law. Any references to operating profit or margin, earnings per share, or free cash flow on today's call will focus on our results on a before charges and gains basis unless otherwise specified. Please visit our website for our reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. With me on the call today are Jesse Singh, our new Chief Executive Officer; Dave Barry, our Chief Operating Officer; and Ashley George, our Interim Chief Financial Officer. Following our prepared remarks, we have allowed time to address questions. With that, I will turn the call over to Jesse. Jesse? Jesse Singh: Thank you, Curt, and good afternoon, everyone. I'm honored and energized to join Fortune Brands Innovations as Chief Executive Officer. Many thanks to the Board for its confidence and to Dave and the leadership team for the decisive actions they've taken over the past 2 quarters. I'd also like to thank the Fortune Brands team for their hard work through a period of change. I have been here a month and what I've seen so far has made me even more excited about the long-term opportunity to accelerate growth and expand margins. We have truly exceptional brands, talented people, and decades of strong customer relationships, and our results over the last few years have lagged our potential. We have great core businesses, including Moen, Therma-Tru, and Master Lock. We also have 2 relevant adjacencies that have become core to the company in our Moen Flo and our Yale connected locks business. We believe we have clear opportunities to expand our position and grow the market in each of these opportunities. We must continue to invest and expand in our core while nurturing our adjacencies. We also have very good people who want to do the right thing, but we, as management, have created conflicting priorities for our team members. Too much of our focus went to internal and corporate distractions and not enough to our customers. Our customers should be the center of everything we do. Our intent is to get back to basics, better service, better products and a simpler, more customer-focused organization. Ultimately, this should lead to a more efficient organization with better execution. As part of this, we must address underperformance in parts of our core. Our water business, for example, has a strong position in the market but has lagged recently. This is driven by several factors, including service and supply chain challenges. We see opportunities in each of our businesses to improve the customer experience and to drive more focused innovation. Our doors business has an opportunity to drive incremental material conversion to our more resilient products. Our security business has an opportunity to expand into additional categories, and we see opportunity for secular growth in our connected businesses. We are developing plans to address our gaps and realize these opportunities. These plans may require incremental investments and resources to improve our service levels and to accelerate our new product development. We believe these actions will yield better long-term opportunity, growth, and profitability. As part of our increased focus on the business, we intend to streamline our corporate cost structure and shift more resources to our customer-facing businesses. There is real work underway, starting with the previously announced $70 million cost program and a detailed review of the portfolio to better align our resources with our core brands. We will continue to evaluate additional actions as needed to create a higher-performing business. By the end of the year, we intend to have the business realigned against these priorities. We will lay out more specifics on our plans over the next quarter or 2, and you should expect to see progress against them during 2027. For the third quarter and the balance of the year, we are assuming a similar operating environment and commercial performance to what Dave and Ashley outlined last quarter. Our updated 2026 guidance is an acknowledgment that we may need to make investments in the company to enhance execution and drive long-term value creation and growth. While it will take time, I am confident that we can build a stronger company that will deliver improved results and shareholder value. We are taking the steps to ensure long-term growth and margin expansion. With that, let me turn it over to Dave. David Barry: Thanks, Jesse, and welcome. I'm looking forward to working together to improve execution and operational discipline in the company. As Jesse laid out his near-term priorities, my focus today is the specific actions to help us realize these objectives. As Jesse noted, we are investing more aggressively in the near term to enhance execution and service, supported in part by the anticipated net tariff refund we recognized in the second quarter. On our last call, we laid out our near-term priorities to improve performance and committed to taking decisive actions to achieve those priorities. On today's call, I'll provide an update on the actions we've taken as well as share additional color on the specific steps that are underway. These are aligned to the priorities Jesse described, execution, including improving the customer experience and accelerating new product development, cost structure, and portfolio. Starting with execution. There are still areas of underperformance that are impacting results, and we will continue to invest in improving our execution while working to streamline our business. For example, last quarter, I described our efforts to reinvigorate our new product pipeline. These efforts remain underway, and we continue to build momentum into 2027. I'll point to 2 recent launches as indicators of our progress, Moen's SwivelControl faucet and Master Lock's Elite pad lock. The recently launched SwivelControl kitchen faucet is engineered to lock in place, providing better directional control, hands-free operation, and automatic redocking. In conjunction with this rollout, we also launched a Retrofit Wand that allows existing Moen faucets to be equipped with a SwivelControl feature. We are excited about these new introductions and initial response from consumers and our channel partners has been positive. On the security side, the Master Lock Elite padlock brings meaningful innovation to consumers and pros, including improved security features and enhanced materials. The lock attributes address the #1 concern of consumers, vulnerability to forced entry. The product so far is exceeding our sales expectations, and we believe it will continue to gain placement across channels through the balance of the year. As I also noted last quarter, our sales and operations planning process has not kept pace with the needs of the business and our customers, which has contributed to service gaps. While we work to implement sustainable fixes, we are spending incrementally to ensure service targets are met. This performance is felt most acutely in water as our service challenges and related investments impacted top and bottom line results in the quarter. While we are making progress in improving our capabilities, we are not where we need to be, and we are prioritizing investments in our operations to improve service levels and accelerate new product development. On the first quarter call, I spoke about optimizing our cost structure to enhance our business unit-led organization and simplifying our structure. During the quarter, we began the process of moving our brand, marketing, and advertising teams back into the business units. Over the past several years, we have centralized these capabilities, which created distance from our business unit teams, resulting in unnecessary cost and slowed execution. Bringing these functions back into the BUs puts brand and commercial decisions closer to the customer, removes layers, and accelerates decision-making. In addition, work is underway to reduce corporate costs, and we have confidence in achieving the previously discussed annualized run rate savings target of approximately $70 million by the first quarter of 2027, with $15 million landing in 2026. Further, we are actively exploring all aspects of our cost structure, and we anticipate ongoing efforts to better align our structure to business results. Lastly, we also highlighted the portfolio as an area of opportunity and our strategic review of Fiberon is underway, following through on the commitment we made last quarter to allocate capital and resources to our highest return opportunities. This is a deliberate step to concentrate investment and management attention on our core brands where we have a clear right to win. We continue to evaluate select portions of our portfolio to drive additional improvements. Turning to the market. Within repair and remodel, we are seeing resilience in certain areas, particularly in luxury categories where the projects are less discretionary, even as consumers remain cautious overall. We continue to expect the R&R end market to be down low single digits for the year. Within single-family new construction, the spring selling season was relatively soft. As we discussed last quarter, our guidance does not contemplate a recovery in single-family new construction in 2026. We still expect this end market to be down mid-single digits for the year. Looking at input costs, inflation continues to accelerate, especially oil, derivatives, and freight. We are monitoring the geopolitical backdrop, including potential outcomes that could ease energy and freight pressure and reduce input cost volatility. Given the uncertainty, our guidance does not assume any relief in commodity inflation before year-end. Additionally, we recognized a benefit from tariff refunds in the quarter. We have called out the net tariff benefit in our consolidated and segment financial results to allow investors to focus on the underlying performance of the business. We expect to use this benefit to invest in our business, including to support service, accelerate new product development, and increase brand awareness with consumers. Looking ahead, IEPA and expiring Section 122 tariffs have been replaced in kind by a combination of Section 232 and Section 301 tariffs. So our overall ongoing tariff exposure remains largely unchanged. With that, I will now turn the call over to Ashley. Ashley George: Thank you, Dave. As a reminder, my comments will focus on results before charges and gains, unless otherwise noted, and comparisons will be made against the prior year. Before I cover consolidated and segment results, I want to walk through the tariff refunds that we recognized in the quarter and the impact these had on our reported results. Our presentation provides a breakdown of the gross and net impact of anticipated tariff refunds on reported operating income and EPS for the second quarter and full year 2026. During the second quarter, we recognized $122 million in gross tariff refunds. Of this amount, $104 million was recognized as reduction in cost of goods during the second quarter. Net of directly attributable variable compensation expense, this translated to $81 million of operating income, 700 basis points of operating margin and $0.52 of EPS in the quarter. The remaining $18 million of gross refunds was recognized as a reduction in inventory, which will flow through our P&L in the second half. We expect this to be fully offset by the remaining portion of the directly attributable variable compensation expense. Given the uncertainty regarding the amount and timing of any additional tariff refunds, we are not forecasting an incremental net benefit in the second half. As the situation evolves, we will update our guidance accordingly. In the second quarter, we had a cash inflow of $9 million from tariff refunds. And through July 31, we have collected approximately $56 million of gross proceeds. Although we do not have specific guidance on the timing of the remaining refunds, we expect to receive the majority before year-end 2026. Now turning to our consolidated results for the quarter. Total company sales were $1.2 billion, down 4%. The decline in sales was primarily driven by our Water segment, partially offset by areas of growth in Outdoors & Security. Consolidated operating income for the quarter was $236 million, up 18.4%, with margin of 20.4%, up 390 basis points. Second quarter EPS was $1.35. Both operating income and EPS benefited from anticipated net tariff refunds. Excluding this benefit, our second quarter results were in line with expectations. Turning to our segment results. Sales for Water were $605 million, down 6.5%. Excluding China, sales were down 5.4%. Sales were impacted by service level challenges, the carryover of discrete share losses from the first half of 2025, and softness in new construction-related demand in our wholesale channel. These were partially offset by continued growth in the e-commerce channel. Waters operating income was $179 million, up 7.9% with margin of 29.5%, up 390 basis points. Operating income reflects a $66 million benefit from anticipated net tariff refunds, equating to 1,090 basis points of margin. Excluding this benefit, the underlying margin decline was driven by unfavorable price/cost, volume deleverage, and higher cost to serve our customers. In Outdoors, sales for the quarter were $365 million, down 3.8%. Excluding Fiberon, sales were down 1.5%, driven by softer new construction-related demand in the wholesale channel, partially offset by growth in retail and positive year-over-year pricing. In addition, Larson performed well as the NIO reset continued to gain momentum. Outdoor operating income was $56 million, up 14.2%, with operating margin of 15.2%, up 240 basis points, reflecting the inclusion of $5 million of anticipated net tariff refunds and improved operating performance. This was partially offset by lower volume and higher tariff, commodity, and freight costs, particularly for Larson. Anticipated net tariff refunds benefited operating margin by 130 basis points in the quarter. Turning to Security. Sales for the quarter were $184 million, up 3.8%, with growth in the commercial, retail, and e-commerce channels. As we highlighted last quarter, we launched a number of new products across Yale and Master Lock, along with the Master Lock retail packaging refresh during the second quarter. Early feedback has been positive, and we estimate that new products contributed almost 200 basis points to sales growth in the quarter. We expect these initiatives to continue to benefit the back half of the year. Securities operating income was $50 million, up 88.2% with operating margin of 26.8%, up 1,200 basis points, reflecting the inclusion of $19 million of anticipated net tariff refunds and improved operating performance, partially offset by higher tariff, commodity, and freight costs. Anticipated net tariff refunds benefited operating margin by 1,030 basis points in the quarter. Turning to the balance sheet and cash flow. Free cash flow for the quarter was $179 million compared to $119 million last year, primarily reflecting a reduction in inventory during the second quarter. We ended the quarter with net debt of approximately $2.3 billion and net debt-to-EBITDA of 2.7x. We are working to reduce leverage below 2.5x through a reduction in debt levels funded through free cash flow generation. On capital allocation, our overarching goal is to maximize free cash flow. From that, we are prioritizing reinvestment in the business to reinvigorate our product pipeline, enhance execution, and ultimately drive growth, after which we will look to return capital to our shareholders. As we focus on improving our performance, we plan to prioritize organic investment over M&A while balancing our share repurchases with achieving our near-term leverage target of 2.5x. Turning to guidance. Our operating environment and commercial performance are largely consistent with what we outlined on our last call. As a result, our net sales guidance of down low-single digits is unchanged. However, we now expect to be slightly below the mid-point of that range as the previously mentioned execution challenges will continue to weigh on volumes and limit the improvement we originally expected in the second half. We are updating our full year EPS guidance to a range of $3.22 to $3.52, which includes a benefit of $0.52 from anticipated net tariff refunds. If you exclude this benefit, it implies full year EPS of $2.70 to $3, reflecting the investments we expect to make to improve service levels, accelerate new product development, and enhance execution, coupled with slightly lower sales growth. Our full year free cash flow guidance incorporates net cash proceeds of $56 million from the tariff refunds received to-date, partially offset by the reduction in our forecasted operating income in the second half of the year. For the second half, we expect a modest improvement in net sales relative to the first half, but still down year-over-year, driven by more favorable retail comps in water and new product launches in security. On a year-over-year basis, we expect price/cost to be unfavorable in the third quarter and favorable in the fourth quarter. At the mid-point of our guidance range, we expect second half margins to be up approximately 100 basis points versus the first half. Looking at the third quarter, we expect net sales to be down between 1% and 2% and EPS to be between $0.72 and $0.76, which assumes operating margin between 12.5% and 13%. As Jesse and Dave shared, we still have work to do to improve our execution, optimize our cost structure and realign our business. While these actions will take time, we are confident that with the right focus and investment, we can set the company up for a stronger future. With that, I'll turn the call back to Curt. Curt Worthington: Thanks, Ashley. That concludes our prepared remarks. We will now begin the question-and-answer session. Since there may be a number of you who would like to ask a question, we will ask that you limit your initial question to 2 and then re-enter the queue to ask additional questions. Operator, can you open up the line? Thank you. Operator: And our first question will come from Keith Hughes with Truist Securities. Keith Hughes: Jesse, a question for you. You've been at the company for about a month now. If you could just talk about after your months there, what do you think the biggest opportunities are at Fortune Brands and flip side, what's some of the biggest challenges you face? Jesse Singh: I came into the role assuming that this business had long-term sustainable growth potential and margin potential capacity. I'd tell you coming in, after the first month, if anything, I'm even more optimistic about that long-term opportunity. If you think about the strength that we have established over the years, we've got a diverse portfolio. We play in 3 really good markets. We've already made the investments necessary in our adjacency in the connected space. I've been pleasantly surprised with the talent that we have. I've been impressed that despite a bit of change in the organization, including at the top, the team over the last few months, has really been focused on building out new product pipelines. The brands continue to be really relevant in the market. And I think one of the other things that, as you know from my previous company, you look for is, is there a growth opportunity that can come from expanding from where you are, whether that be some kind of a material conversion or really expanding the market into other categories. And really, I've been pleasantly surprised in the early discussions across all of our businesses, those kinds of opportunities exist. Obviously, in a business like Therma-Tru, there's more material conversion opportunity. In Connected Home, there continues to be opportunity where that market is just growing. And in our core Water business, there also continues to be opportunity to really expand the pie. In terms of some of the challenges, I think we touched upon them on the call. We need to get back to making sure that we deliver a really good service level to our core. There's been good progress there. We're going to have to continue down that journey. I also think we've just been way too complex, and I highlighted that in my comments on the call. We've had a complex organization that the team has had to work through. I think as we simplify that and bring the discussion down to how do we continue to grow and execute in each of these important businesses, I think we'll start seeing the results. Keith Hughes: Okay. Great. One other question. I was interested in Dave's comments of you're moving the marketing and advertising, et cetera, back into the field, if you will, which is great news. How long will you take? Will you able to get that done by the end of the year, I guess, is really the question? Jesse Singh: Yes. Look, we've taken -- and I'm glad you pointed out Dave's comments. I think Dave did a terrific job in the short time that he had to start to move back in that direction. I think we're looking at ways to align the business to really give our -- align the overall structure to really give our businesses a chance to aggressively execute. I would expect that we'll continue to refine that, and we'll make really good progress in the months to come. And we would expect to be in a really good position by the end of the year. David Barry: And Keith, I would add, if you think about it, we talked about it last quarter, fundamentally, it's about getting these resources of ours closer to the business, to increase execution and efficiency and really become more customer-focused. And as Jesse called out, we have great people who are in roles now. We have critical talent. It's really getting those people set up for success and getting our business set up for success by putting them in the right spot in the organization. And so that work is underway with pace right now. Operator: And our next question will come from Matthew Bouley with Barclays. Matthew Bouley: So just one on sort of the -- maybe how you're thinking about the cost outlook here. So if I'm hearing everything correctly, you sort of had this, I guess, fortuitous opportunity to take these tariff refunds and you needed to be reinvesting and you're using that to reinvest here. And it sounds like maybe there's some front-loading. But at the same time, you see kind of a longer-term opportunity to really streamline the corporate structure of the business. So my question is basically timing and magnitude there. How should we think about what needs to be reinvested into the business? And then at what point could we really begin to see the sort of fruits of those efforts? And how do you think about that ongoing cost structure of the business? Jesse Singh: Yes. Look, I really appreciate the question, and it is certainly the right question for the long term. I would say it's too early to give you a cadence of that combination of reallocating resources and what's the overall ramifications. I think with our current guidance, there's an acknowledgment that, that balancing act may require some investment before the costs are fully realigned. Without being too specific, we'd be hopeful that we could make progress against that balance sometime during 2027. I think for the long term, I think that there's certainly opportunity to increase resourcing in the business while we are driving SG&A efficiency. David Barry: And Matt, maybe I'd add the areas where we're investing, we would have addressed those areas regardless of the tariff refund. They're core to protecting the business, the revenue and the future of the business. With Jesse on board, we're using it's an opportunity to be more aggressive and accelerate those investments here in the near term, so that we set ourselves up for success in 2027. Matthew Bouley: Got you. Okay. Yes. No, got you loud and clear and appreciated that a lot of this is still kind of to be determined. So then maybe second one, just kind of jumping down into the model and the numbers on the Water business. Appreciating there's a lot of moving pieces with the tariff refund there in terms of the margin. Obviously, we saw your peer report last week. Maybe you can kind of break out sort of underlying market performance in the Water industry, how volumes and price are tracking and sort of within the guide, how you're expecting all of that, both top line and the margin cadence in the second half to play out? Ashley George: Let me maybe jump in with some of our numbers and drivers for Water in the quarter, and then I'll have Dave add some color. If you look at this business, clearly not performing where we want it to, sales down 5.4% in the quarter, excluding China, that is price up low-single digits, volume down high-single digits. So I think about drivers in the quarter, I think about it as 2 primary drivers, both driving about half of that net sales decline. The first one is the carryover from discrete share loss in the first half of last year that we've talked about. And then the second driver were the service challenges in the quarter that we talked about. There are some other puts and takes, but I think about those as the 2 primary drivers for Q2. Probably worth saying as well that our luxury segment continues to outperform. Our House of Rohl sales performance was better than the Moen business in the quarter. Let me flip to operating margin, and then we can add some color. But from a margin standpoint, if you take out the impact of tariff refunds and do the math, you get operating margin down 700 basis points versus prior year. Three big drivers. About half of that is coming from price cost that was as we expected in the quarter. You've got another roughly 200 basis points coming from some of the service challenges, incremental costs that we incurred to serve our customers in the quarter. And then the remaining really comes from volume deleverage. So if you back out the service challenge impact of 200 basis points in the quarter, you get to something that was in line with our expectations coming out of Q1. David Barry: And I think that's a critical point, Matt, if we step back and just look at the Water business, commercially largely performing in line with our expectations a quarter ago. As Ashley alluded to, the top line was impacted, call it, 2.5 percentage points from a sales -- on the sales line from service and inability to fulfill the demand where that's one of the areas we're focused on investing. We will continue to spend on premium freight. We'll continue to spend in our DCs. We will look at sourcing even it's from a higher cost supplier that can be more delivery focused and get our products more consistently. And then looking at the margin, what really was different was that premium cost to serve from a quarter ago. And so we'll continue to spend there. That will be investments through the second half. As we look forward, if you think about where Water margins could go from here, right? There are -- there's still pretty significant price cost headwinds in the third quarter. They start to ease a bit from the 380 basis points, but they're still significant. That starts to turn more favorable in the fourth quarter. And then as we sustainably solve our demand planning and service challenges, that can become a tailwind as you move into 2027. So I do think the next couple of quarters probably represent more of a trough for water margins and then you start to see them build back as we move into next year. Operator: And we'll go next to Susan Maklari with Goldman Sachs. Susan Maklari: My first question is, at a higher level, can you help us bridge the revised earnings guide of $2.70 to $3 relative to the prior guide of $3 to $3.30. Can you just kind of walk through the puts and takes there that we should be thinking about? Jesse Singh: Yes. Just at a high level -- and I'll let Dave provide a bit more color. At a high level, from a commercial standpoint, as Ashley highlighted, the business is operating similar to what was discussed on the last quarter. I think there's really 2 components to the adjustment. I think number one is there's an acknowledgment that if -- that incremental expense would provide incrementally better service, which we think is the right thing for our customers. I think the second component is we are starting the journey of accelerating certain investments that we believe will start to put the business back on a growth trajectory. And the most obvious one is I highlighted that we have a pretty good and accelerating portfolio of potentially new products. We see terrific opportunity. And I'll give a Security example. We launched a more premium lock recently. It's doing well. We see opportunity to continue to expand that portfolio and other products like that. So we want to find ways to accelerate that, those types of products. And I think similarly, we see really good material conversion opportunity in our Doors business. We want to make sure that we take the steps to accelerate those types of products. And then there'll be some incremental additional investments on -- related to growth. David Barry: And I would add just to put some numbers behind it, too, if you think about the $0.30 drop in EPS at the midpoint, I think of it as $0.20 or so of investment that Jesse outlined and then, call it, $0.10 or so of volume, but really volume directly attributable to service constraints. And so another good example where we're having some strong success is with Yale in multi-family, we're choosing to really prioritize that volume at the expense of maybe running an incremental promotion that might overwhelm some of our service. So it's really continuing to focus in on where can we serve, where are we winning, how do we prioritize that volume, and dialing back some of the extra things here in the near term while we get everything more sustainable going forward. Susan Maklari: Okay. That's very helpful color. And then maybe turning to the various priorities that you outlined, the execution, investing in service, optimizing the cost structure, reviewing the portfolio. Can you give us some sense of which of those we should expect to come through in the near term, maybe within the next couple of quarters, the next year versus are there some of those that will be a bit longer in their nature and take more time to work through and come through to the results? Jesse Singh: At a high level, and I'll ask Dave to comment. I think there's activities in each of the areas you talked about and think of it as customer experience, an improvement on our execution, and that includes realignment of the organization, new product growth, and an increase of investment in our core. If you just take that at a high level of what you just laid out, we're taking action on all of those things right now. We would hope to see results -- we would hope to see progress, I should say, from those actions during -- as we move through 2027. Obviously, growth tends to be a longer cycle activity, especially new product growth. So that may take a bit longer. But certainly, as we look to streamline our execution, improve our service, simplify our organization, all of those sorts of things, you're going to start to see the benefit of that as we move early into '27. David Barry: Yes. And as we said in the prepared remarks, we're on track for delivering the $70 million cost out separate from the investments that we're making in the near term to continue to improve the performance of the business. And to Jesse's point on new products, I think we talked about this last quarter as we're rebuilding that pipeline and trying to pull things through faster. But that could be a 2-, 3-, 4-quarter lag because by the time you launch a product, you get placement, the shelf resets, it can take that long. So I think new products may be more impactful as you move into the second half of next year, even though we're starting to see some wins now, but should have the cost -- the initial wave of cost out behind us in the first quarter. Operator: And we'll hear next from Mike Dahl with RBC Capital Markets. Michael Dahl: So I also wanted to follow up on kind of the investment dynamic just to make sure we have a clear picture of it. You've outlined a couple of things kind of high level in terms of [ outlooks ]. It sounds like a lot of this is in Water, but then there's some new product-oriented dynamics. Can you just give us a little bit more of a detailed kind of bridge on or quantification of where these investments are sitting in terms of both, I guess, by category or by segment, just to help us understand that second half dynamic a little bit more. David Barry: Yes. I contextualize it a bit, Mike, based on performance. And Outdoors & Security largely performing as expected through those businesses, and I the opportunity there is to invest to accelerate that performance. So you'll see new product investment going into Outdoors & Security. You'll see commercialization investment in both of those businesses to accelerate the new products that we've launched. And then we have a Master Lock brand campaign that's performing really well. So we'll continue to invest behind that. On the Water side, it's the biggest piece of our business. It's the piece that is performing probably below expectations at the moment. So the bulk of the investment will be directed towards Water, especially on the service side as we look to continue to spend to service our customers. Jesse Singh: Yes. And let me just -- let me put a little bit of a context. I realize we're talking about service and just to put a little bit of a context on how we arrived at some of these service issues. I mean, we've -- we made some systems changes and some organizational changes. And for the right reasons, we also made some supply chain changes as our supply chain was under stress during the initial and multiple rounds of tariffs. And so the outcome of that is we created some disruption in our supply chain and therefore, some disruption in our service. So a lot of what we're talking about is getting back to a stable supply chain, getting back to stable S&OP processes, going back to our core systems that we were using and getting back to what we would consider a baseline of performance. So what we're talking about here is it's not a unique and unknown problem to solve. We're just -- we're bringing the organization back to stability after a year of some changes. Michael Dahl: Yes. That's helpful detail. And maybe just a clarification and then a second question. Just on the supply chain dynamic. I know you guys were working hard and aggressively to move costs out of China. So is that effectively like some of that backfired and now that you know the better way -- a more -- we think maybe a more stable way of the land in terms of new tariff dynamics, there's some reshifting in some of the global supply chain. Then my real follow-up question was a lot of the discussion on investment sounds very kind of OpEx-oriented. What's your view on your physical capacity footprint, Jesse? And any early thoughts on kind of puts and takes as you think about CapEx going forward? Jesse Singh: Yes. Just initially, we've got plenty of capacity in our facilities. And we have the capability. This is not as capital-intensive a business as you and I have discussed in the past. And so I feel pretty good, and I'll let Dave comment just on our capital footprint. Look, there might be some capitalization on either R&D or on systems investments. But in terms of hard assets, there's always a little bit of incremental here and there, but we're in a pretty good spot. And then maybe to answer your question on the supply chain, there's some good decisions being made, but sometimes in the execution on the pitch and patch, the organization that's receiving the supply may not have been ready for the volume. And so we're going to make sure we take a look at what's the right supply chain footprint to have, what's the right way to manage that. And we might be a little bit more cautious than we were in the past to make sure that as we execute any changes, and there's always some changes that we do it in a way that is probably a bit more methodical. And in the short term, that may lead to slightly higher costs in the moment, but it might be the right thing for our customers and the right thing for long-term growth. David Barry: And I think from the -- on the capacity point, Mike, so if you think about our CapEx, we talked about this in the past, we're roughly 1% of sales maintenance CapEx and the balance for growth, new products, and cost out. And if you look at the guide, the CapEx guide, $110 million to $125 million, lower than it's been in years past, but I think we had some more capacity investments in years past and now feel like we're well-positioned to absorb incremental volume in the future years. Operator: And our next question will come from John Lovallo with UBS. John Lovallo: The third quarter operating margin of 12.5% to 13%, that's inclusive of the $18 million [ good guy ] in inventory that's coming through COGS in the quarter, correct? And if so, I mean, how should we sort of think about margin pressure across segments? Ashley George: Yes. Let me start. In Q3, it does include the incremental refund coming off the balance sheet, but important to note that will be offset with the directly attributable variable comp and some of that will hit in Q3 and Q4. But that will essentially offset that net benefit in the second half. Q3 margins, if you think about it sequentially off of Q2, I would think about some favorability coming from price cost as that starts to improve sequentially in Q3, although we don't see the year-on-year improvement until Q4. But then that is offset by both volume leverage and SG&A from the investments to drive execution we've been talking about. So net down sequentially, price cost up investments -- price cost favorable investments unfavorable. David Barry: And the only thing I'd add to that, prior year, there was a benefit from variable comp unwind, and it was pretty sizable in the quarter last year, it's about $25 million or 270 basis points. So we're comping that benefit from last year. Otherwise, I agree with what Ashley said. Price cost, it's a little bit better. Sequentially, it still unfavorable and then you have some volume deleverage on the margin. John Lovallo: Okay. Got you. Okay. So then all right, then if we think about that, SG&A in the quarter, I mean, dollars were up like 4% year-over-year, I think, on like a 4% decline in revenue. And I think as a percentage of sales, SG&A was up like 230 basis points. I thought that there may have been some incentive comp in that, but it appears like there may not have been. So what sort of drove that outside of a little bit of deleverage? David Barry: No, there is incentive comp. And I was talking third quarter, John. Last year's prior third quarter, second quarter, you have the tariff-related directly attributable incentive comp in SG&A. John Lovallo: Okay. So it did hit in the second quarter? David Barry: Correct, John. Ashley George: Yes. Operator: And we'll go next to Phil Ng with Jefferies. Philip Ng: In your past wall, I would say you were super collaborative with the channel. So what's the early feedback? What are you hearing from your channel partners? Are there areas where perhaps you may realign who you work with, particularly on the plumbing side where you're oversupplied, undersupplied, areas where you think you could fill a void perhaps where you're underpenetrated like e-com? Just give us an early read in terms of what you're hearing and opportunities on the channel side of things. Jesse Singh: Yes. I appreciate the question, Phil. What I would say is just in aggregate across the board, coming into this role, I've been very pleased that we've got brands that matter and brands that are relevant to each of our channel partners. So that's a good place to start. I think if you look in each of our businesses, there's opportunity for us in all channels. And there's certainly some channels where I would say we are underpenetrated, where I think there'll be an opportunity with better execution and correct products where we'll have a chance to see -- we'll just have more opportunity and more of a chance to have growth in some of those segments. And once again, it's going to vary by each part of our portfolio. But I think it's safe to say -- yes, look, I'll give you a macro without being too specific. I think in a couple of our businesses, be it Water or Doors, we're probably -- we've got a great position with new construction, single-family new construction, which I think is always for the long term, going to be a good segment. But in general, we -- in both those businesses, we are under-indexed in the R&R-oriented side of the business. And obviously, R&R has been more stable and is complex. It's broad, it's multiple channels, multiple customer sets. There'll be an opportunity for both those businesses to continue to expand into that part of the housing sector. Philip Ng: Okay. That's helpful. Perhaps a question for Ashley. In the press release, you guys provided some color in terms of Outdoor sales and how that would look like without pipeline. Not going too deep, any color when we think about how that portfolio could look like over time with some of the cost-out actions in that same format with or without some of those dynamics, how should we think about the opportunity for that margin profile opportunity for Outdoors going forward? David Barry: Yes. So this is Dave. Maybe I'll take this at a high level. But it's hard to get into details when we're in an active strategic review of the business. But I'd say what we have in our Doors business, we feel really good about the strength that we have within Therma-Tru. It's a material conversion story that still hasn't fully played out. As Jesse referenced, Doors are probably 55% converted right now away from wood and steel. So we see really secular growth opportunities in Therma-Tru, and we are the leader there in that space. And then Larson, the reset that happened at our retail partner continues to go really well, and we continue to work through that product portfolio. And so we see Larson growing POS, growing share, and performing really well. And I think it's a good example of what we can do when we get it right around new product and commercialization with a strong partner. And so like happy with the Doors business, and we'll continue to move with pace on the strategic review of Fiberon. Operator: And moving next to Trevor Allinson with Wolfe Research. Trevor Allinson: First one on the kind of the overall portfolio and going back to the Fiberon strategic review. What's kind of the time line for completion there? And then as we think about the portfolio more generally, how should we think about other parts of that business or other parts of your business overall? Could there be other companies that you look at as maybe not being core for you guys moving forward? David Barry: Trevor, I'll take Fiberon and let Jesse comment on the portfolio. I'll say we've retained advisers, and I'm pleased with the progress we're making against identifying the appropriate outcome, which for us, looking to maximize value for our shareholders and also set the business up for success with our customers and our employees. And so I can't commit to a time line on the call, but we're moving with pace and pleased with where we are. And Jeffrey? Jesse Singh: Yes. Just on the overall portfolio, I would think of it maybe in pockets at a more granular level, which we want to make sure we're in a really good position to win and continue to expand. And so against that, we'll take a look at certain product lines, certain kind of subsegments, potentially within our aggregate portfolio to see if there's opportunity there. But in general, if you look at effectively the 3 core pillars plus the adjacent pillar with our interconnected business that I just talked about, we feel really good about each of those pillars and our ability to win and expand in each of those pillars, but there might be tweaks that occur within those pillars to optimize. It's still early, and we'll keep you updated on that. Trevor Allinson: Okay. I appreciate all that color. And then second one would be on your inflation expectations across the business in 2026, specifically in Water, just given the move in copper and zinc prices year-to-date. How should we think about the inflation across those businesses and across the entire year? And then perhaps also some commentary on exit rate inflation. Ashley George: Yes, I'll start. If we look at inflation for the year, pretty consistent with what we've talked about full year previously. So we've got about $100 million year-on-year increase in tariffs hitting the P&L in year. Now remember, most of -- a larger portion of that hit in the first half. And then we are increasing our commodity estimate from $80 million incremental to $90 million incremental. So a $10 million increase in commodity and freight inflation driven across brass, copper, aluminum, and freight. I think as we look at where we are in year, our commodities tend to be pretty locked based on the timing of when they hit the P&L. But as we assess 2027 and sort of where we're coming out of this year, I think we're in the early planning phases, so probably too early to comment on any specific numbers. But the way the cadence usually works is it gives us time as we get in the planning process to look and assess those commodity increases against our pricing in the market. So we'll do that holistically as part of our '27 planning. Operator: And our next question will come from Stephen Kim with Evercore ISI. Stephen Kim: My first question relates to the incremental investments. If my math is right, it seems like you're talking about, call it, $45 million to $50 million or whatever of incremental investments this year. I think you said about 2/3, 1/3 of that's going to be due to addressing service issues and hopefully getting some volume from that, about the other 2/3 would be from initiatives like new products. And so first question is, where do these investments hit the P&L? And then secondly, can you give us an understanding as to how you're going to boost near-term product launch productivity through incremental investments? Is this basically just marketing expense? Is this going to be some sort of increased incentives of some kind? Just give us a sense for how that -- how those dollars are going to be allocated. David Barry: Yes. I'm happy to start on that. And Steve, just I think clarify a bit. So on the investment side, what we talked about was roughly $0.20 of EPS, so call it, $30 million or so. I'd say predominantly hit through OpEx, mostly in SG&A as we move through the balance of the year, maybe a bit in COGS if we move some of the sourcing around that we're looking at. So I think that's how you should think about it flowing through the P&L. And then on the new product side, a few things we can do there, right? Commercialization, as you touched on, is one of them. And just as we launch products, making sure we're supporting them in the marketplace. But then also there's opportunity to invest -- co-invest with some suppliers to develop technologies faster. And I think it's -- we may have touched on it on the last call, but one areas of opportunity broadly for new products to bring them to market faster is to work more closely with our sophisticated supply base to do that. And so we lean in there and then really just incremental resources where the team needs them to pull projects in faster. And so it's the focus we've talked about now for a couple of quarters to get this new product development engine going, and we're pleased with initial results, but we know we have a lot of work left ahead of us. Stephen Kim: Got you. Okay. That's helpful. And then when you talk about -- or you've talked about service a number of times, obviously. And it seemed like I think you had indicated that, that was something which was the main difference from your expectations in your Water performance, if I heard Ashley right, on the operating margin bridge. I was curious if you could sort of talk a little bit more about specifically what the issue is there? It sounds to me like it's not a suboptimal geographic supply chain from an earlier question. It seems like it maybe is more a systems or a software issue that, I guess, you've arrived at a solution on. Can you just give us a little bit of color there? And then also, you called this out, I think, is sort of the main delta from your expectations in Water. And I'm curious is -- was there some sort of discrete event that hit this particular quarter? Because I know that service levels is something that you were focused on 3, 6 months ago as well. And so I would have expected that you would have expected something in 2Q already. So if you could just provide some color there. Jesse Singh: I'll start and let Dave chime in. In terms of discrete, think of it as expedited freight and cost of expediting product in order to make sure that we sustain delivery to our channel partners. And so we're working our way through that. There might be some additional expedited freight. And, yes, we've got a number of SKUs across a number of different product categories. There's different reasons for that. In some cases, it was an outcome of a change of a source of supply where the receiving supply couldn't ramp up fast enough. In other cases, it was, as I described earlier and as you highlighted, some systemic issues, right? So without getting into too much detail, the organization has gone through a lot of change in the last 6 to 12 months, in particular. And as part of that change, we made some alterations to the systems we use to conduct our S&OP. And in effect, the new process and new systems did not deliver the required levels of inventory to be able to service our customers. It's -- I hate to say it, but it's that simple. I could give you a positive spin, but those of you that know me know I'm not going to do that. It's just we had a few misses. And so we're resetting back to the old process that allowed us to consistently deliver for years, and we're kind of going back to what we were doing earlier. Once again, the intent was positive, the blend of systems and organizational changes. The intent was to have higher service at lower inventory, and that just didn't work out. And so we're addressing that issue. Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to Jesse Singh for closing comments. Jesse Singh: Thank you all for engaging with us tonight. We are really excited about the opportunity that's ahead of us. As I mentioned earlier in the call, we are confident that we've got a terrific opportunity here to start to accelerate this business. It will require some additional investment, as we've talked about. And I'm confident that we've got the right team here to continue to progress this. And what we talked about today is the first step in that direction. So with that, look forward to chatting with many of you in subsequent events. Thanks, and have a great evening. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day. Before you buy stock in Fortune Brands Innovations, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Fortune Brands Innovations wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fortune Brands Innovations (FBIN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

During the August 6 episode of Mad Money, Jim Cramer focused his market analysis on the recent trajectory of Constellation Brands, Inc. (NYSE:STZ), asking why investor sentiment has remained sluggish despite robust underlying fundamentals. He said: Constellation Brands, Inc. (NYSE:STZ) commands the domestic imported beer market with premier labels like Modelo, Corona, and Pacifico, yet shares have retreated significantly from their spring 2024 highs. As per Constellation Brands, Inc.'s (NYSE:STZ) first quarter earnings results for fiscal 2027, total net sales reached $2.43 billion, while comparable EPS was $3.43, beating Wall Street consensus estimates of $3.21. The beer division served as the primary profit engine, as it reported $2.28 billion in net sales, up 2% year-over-year, while maintaining an impressive segment operating margin of 39%. Furthermore, management highlighted favorable demand tailwinds from global sporting events like the World Cup, which supported category depletions. Addressing intra-quarter volume shifts alongside Chief Financial Officer Garth Hankinson, CEO Nicholas Fink explained that purchasing behavior began with a normalized, resilient start in March before sharply decelerating through April and May. Management attributed the slowdown to a national spike in gas prices, compounding years of cumulative inflation and squeezing lower-income consumer discretionary budgets. Despite the beats and an affirmed full-year comparable EPS guidance range of $11.20 to $11.90, equity shares faced pressure because executive leadership maintained rather than raised its full-year forecast. Macroeconomic headwinds continue to weigh on institutional sentiment due to cumulative inflation, higher gas prices tempering discretionary consumer spending, and policy uncertainties surrounding immigration enforcement. On July 21, Barclays maintained a Hold rating on Constellation Brands, Inc. (NYSE:STZ) stock while lowering their price target to $132 from $139. Barclays analysts emphasized that intermediate multiple expansion remains constrained by a heavy impending ramp in beer operating expenses and risks of volume deceleration following the conclusion of the World Cup. According to institutional tracking data from Insider Monkey, the number of tracked hedge funds holding positions in Constellation Brands, Inc. (NYSE:STZ) shifted from 53 in the fourth quarter of 2025 to 56 in the first quarter of 2026, though it is worth noting that regulatory 13F filings represent a backward-looking snapshot showing multi-quarter structural positioning rather than reactive day trading. Lastly, the short interest is 4.83% of shares outstanding, indicating mild bearish sentiment. The company combines dominant brand equity and strong cash generation with valuation appeal, leaving executive execution under new leadership as a significant catalyst for future equity appreciation. While we acknowledge the potential of STZ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Jim Cramer Examines Akamai Technologies' (AKAM) Cloud Pivot and Robotics Win and Jim Cramer Weighs In on Space Equities: Rocket Lab (RKLB) vs. Voyager Technologies (VOYG). Disclosure: None. Follow Insider Monkey on Google News.

Interested in Fortune Brands Innovations, Inc.? Here are five stocks we like better. Second-quarter results benefited significantly from tariff refunds: Sales fell 4% to $1.2 billion, while operating income rose 18.4% to $236 million and EPS reached $1.35. The company recorded a $122 million gross tariff refund, including a $0.52 after-tax EPS benefit. Water remained the main operational weakness: Segment sales declined 6.5% amid service-level disruptions, supply-chain issues and softer new-construction demand. CEO Jesse Singh is simplifying operations and increasing investments in fulfillment, product development and customer service. Fortune Brands maintained a cautious outlook while pursuing restructuring: The company expects 2026 sales to decline by low single digits and EPS of $3.22–$3.52, including tariff benefits. It remains on track for roughly $70 million in annualized savings by early 2027, is reviewing Fiberon, and aims to reduce leverage below 2.5 times EBITDA. Fortune Brands Innovations (NYSE:FBIN) reported second-quarter sales of $1.2 billion, down 4% from a year earlier, as service-level challenges in its Water segment and softer new-construction demand weighed on results. The company said operating income rose 18.4% to $236 million and earnings per share were $1.35, with both measures benefiting from anticipated tariff refunds. New Chief Executive Officer Jesse Singh, who joined the company about a month ago, said Fortune Brands is pursuing a simpler, more customer-focused operating model while increasing investments to improve service, accelerate product development and support long-term growth. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “Our customers should be the center of everything we do,” Singh said. “Our intent is to get back to basics, better service, better products, and a simpler, more customer-focused organization.” Interim Chief Financial Officer Ashley George said the company recognized $122 million in gross tariff refunds during the quarter. Of that amount, $104 million was recorded as a reduction in cost of goods sold, producing an $81 million benefit to operating income, a 700-basis-point benefit to operating margin and a $0.52 benefit to quarterly EPS after directly attributable variable compensation expense. → 3 Drone Stocks That Should Soar After the Summer Slump The remaining $18 million was recognized as an inventory reduction and is expected to flow through the income statement during the second half of 2026. Fortune Brands expects that benefit to be fully offset by remaining related variable compensation expense. The company had collected approximately $56 million in gross refund proceeds through July 31 and expects to receive most of the remaining proceeds before year-end. Excluding the net tariff-refund benefit, George said second-quarter results were in line with company expectations. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Water segment sales fell 6.5% to $605 million, or 5.4% excluding China. The company attributed the decline to service-level issues, the carryover effect of share losses in the first half of 2025 and softer new-construction-related demand in wholesale channels. E-commerce growth partly offset those pressures. Water operating income increased 7.9% to $179 million, while operating margin expanded 390 basis points to 29.5%. However, results included a $66 million net tariff-refund benefit. Excluding that benefit, the underlying margin declined due to unfavorable price-cost dynamics, lower-volume leverage and higher costs to serve customers. Singh said recent supply-chain, organizational and systems changes had disrupted the company’s sales and operations planning process. The company is returning to prior processes that had delivered more consistent service levels and is spending more on premium freight, distribution centers and sourcing to improve fulfillment. Chief Operating Officer Dave Barry said Water margins could remain under pressure over the next several quarters, though price-cost trends are expected to improve sequentially in the third quarter and become more favorable year over year in the fourth quarter. Outdoors sales declined 3.8% to $365 million. Excluding Fiberon, sales were down 1.5%, reflecting weaker wholesale new-construction demand, partly offset by retail growth and favorable pricing. Larson performed well as its retail reset continued to gain traction, according to the company. Outdoors operating income rose 14.2% to $56 million, with operating margin up 240 basis points to 15.2%. The segment received a $5 million benefit from anticipated net tariff refunds, while improved operating performance was partially offset by lower volume and higher tariff, commodity and freight costs. Security sales rose 3.8% to $184 million, supported by growth across commercial, retail and e-commerce channels. New product launches and a Master Lock packaging refresh contributed nearly 200 basis points to segment sales growth, George said. Security operating income climbed 88.2% to $50 million, including a $19 million net tariff-refund benefit. Barry highlighted the recently launched Moen SwivelControl faucet and Master Lock Elite padlock as examples of the company’s renewed product-development effort. He said initial consumer and channel-partner response to the faucet was positive, while the Elite padlock was exceeding sales expectations. Fortune Brands is moving brand, marketing and advertising teams back into its business units after previously centralizing those functions. Barry said the move is intended to bring commercial decisions closer to customers, reduce organizational layers and speed decision-making. The company remains on track to deliver approximately $70 million in annualized run-rate savings by the first quarter of 2027, including $15 million expected in 2026. It is also conducting a strategic review of Fiberon and evaluating other parts of its portfolio, though management did not provide a timeline for completing the Fiberon process. Singh said the company plans to complete a broader business realignment by the end of 2026 and expects progress from its initiatives during 2027. Management said it will prioritize organic investment over mergers and acquisitions while working to reduce net leverage below 2.5 times EBITDA. Net debt at quarter-end was approximately $2.3 billion, or 2.7 times EBITDA. For 2026, Fortune Brands maintained its expectation for net sales to decline by low single digits, though it now expects results to be slightly below the midpoint of that range. The company forecast full-year EPS of $3.22 to $3.52, including the $0.52 benefit from anticipated net tariff refunds. Excluding that benefit, guidance implies EPS of $2.70 to $3.00. The company expects third-quarter sales to decline 1% to 2%, with EPS of $0.72 to $0.76 and operating margin of 12.5% to 13%. Fortune Brands Innovations (NYSE: FBIN), formerly known as Fortune Brands Home & Security, is a global leader in water innovations, specializing in the design, manufacturing and marketing of plumbing fixtures, fittings and related products. Headquartered in Deerfield, Illinois, the company leverages two iconic brands—Moen and House of Rohl—to deliver high-quality kitchen and bathroom solutions across residential and commercial markets. With a focus on performance, reliability and aesthetic design, FBIN’s portfolio spans faucets, showerheads, accessories and water filtration systems. The company’s products are sold through a diversified network of retail partners, wholesale distributors and online channels across North America, Europe, Asia-Pacific and Latin America. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Fortune Brands Innovations Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is initiating a 'back to basics' strategy to address recent underperformance driven by internal complexity and conflicting corporate priorities. Performance in the Water segment was significantly hampered by service and supply chain gaps resulting from unsuccessful changes to S&OP processes and systems. The company is shifting from a centralized corporate model back to a business unit-led structure to place brand and commercial decisions closer to customers. Strategic focus is being narrowed to core brands (Moen, Therma-Tru, Master Lock) and high-growth connected home adjacencies (Moen Flo, Yale). Operational challenges in the quarter were exacerbated by a soft spring selling season in single-family new construction and cautious consumer behavior in R&R. Management acknowledged that previous attempts to optimize inventory through new systems failed to deliver required service levels, necessitating a return to legacy processes. The company is utilizing a one-time tariff refund benefit to fund aggressive near-term investments in service recovery and new product development. Full-year EPS guidance was revised to $2.70–$3.00 (excluding tariff benefits) to reflect approximately $0.20 of incremental investment and $0.10 of service-related volume loss. The company expects to achieve a $70 million annualized cost-savings run rate by Q1 2027, with $15 million realized in the current fiscal year. Guidance assumes no recovery in single-family new construction for the remainder of 2026, with the market expected to be down mid-single digits. Management anticipates that 2026 will represent a trough for Water margins, with recovery expected in 2027 as supply chain stability and price/cost dynamics improve. Capital allocation will prioritize organic reinvestment and debt reduction to reach a 2.5x leverage target before resuming significant M&A or share repurchases. Recognized $122 million in gross tariff refunds in Q2, contributing $0.52 to EPS; the majority of remaining cash proceeds are expected by year-end 2026. A formal strategic review of the Fiberon decking business is underway to concentrate resources on higher-return core brands. Input cost inflation is accelerating in oil derivatives and freight, with management increasing the full-year commodity headwind estimate to $90 million. Ongoing tariff exposure remains largely unchanged as expiring Section 122 duties have been replaced by Section 232 and 301 tariffs. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management admitted that recent changes to S&OP systems and organizational structures failed to maintain adequate inventory levels. The company is reverting to legacy processes and spending incrementally on expedited freight and high-cost sourcing to stabilize customer delivery. These disruptions are viewed as self-inflicted 'pitch and patch' execution errors rather than structural market failures. The program is on track to reach full run-rate by Q1 2027, primarily driven by decentralizing marketing and brand functions back to business units. Management expects the balance between incremental investments and SG&A efficiency to show meaningful progress during 2027. Investments are being front-loaded into R&D and co-development with suppliers to accelerate launch timelines for premium products like Master Lock Elite. Management noted a 2-4 quarter lag between product launch and meaningful financial impact due to retail shelf reset cycles.

Home and security products company Fortune Brands (NYSE:FBIN) met Wall Street’s revenue expectations in Q2 CY2026, but sales fell by 4.1% year on year to $1.15 billion. Its non-GAAP profit of $1.35 per share was 63.8% above analysts’ consensus estimates. Is now the time to buy Fortune Brands? Find out in our full research report. Revenue: $1.15 billion vs analyst estimates of $1.16 billion (4.1% year-on-year decline, in line) Adjusted EPS: $1.35 vs analyst estimates of $0.82 (63.8% beat) Adjusted EBITDA: $277.5 million vs analyst estimates of $196.4 million (24% margin, 41.3% beat) Operating Margin: -0.8%, down from 14.3% in the same quarter last year Free Cash Flow Margin: 19.6%, up from 9.9% in the same quarter last year Market Capitalization: $6.22 billion Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products. A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Fortune Brands’s demand was weak and its revenue declined by 9% per year. This wasn’t a great result and is a sign of poor business quality. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Fortune Brands’s annualized revenue declines of 4.1% over the last two years suggest its demand continued shrinking. This quarter, Fortune Brands reported a rather uninspiring 4.1% year-on-year revenue decline to $1.15 billion of revenue, in line with Wall Street’s estimates. Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. Fortune Brands has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 13.4%. This result isn’t surprising as its high gross margin gives it a favorable starting point. Analyzing the trend in its profitability, Fortune Brands’s operating margin decreased by 9 percentage points over the last five years. Even though its historical margin was healthy, shareholders will want to see Fortune Brands become more profitable in the future. This quarter, Fortune Brands’s breakeven margin was -0.8%, down 15 percentage points year on year. Conversely, its gross margin actually rose, so we can assume its recent inefficiencies were driven by increased operating expenses like marketing, R&D, and administrative overhead. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Sadly for Fortune Brands, its EPS and revenue declined by 6.5% and 9% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Fortune Brands’s low margin of safety could leave its stock price susceptible to large downswings. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Fortune Brands, its two-year annual EPS declines of 3.7% show it’s still underperforming. These results were bad no matter how you slice the data. In Q2, Fortune Brands reported adjusted EPS of $1.35, up from $1 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Fortune Brands’s full-year EPS to shrink by 11.4% from $3.83 to $3.39. It was good to see Fortune Brands beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 1.9% to $53.74 immediately following the results. Fortune Brands had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Highlights: Q2 2026 sales were $1.2 billion, a decrease of 4.1 percent versus Q2 2025 Q2 2026 GAAP EPS was ($0.19), inclusive of a ($1.44) asset impairment charge and a $0.52 benefit related to net tariff refunds1; EPS before charges / gains was $1.35, also inclusive of net tariff refunds1 Delivered Q2 2026 underlying EPS in line with expectations Updated full year 2026 guidance to reflect the impact of net tariff refunds1 and investments to enhance execution DEERFIELD, Ill., August 04, 2026--(BUSINESS WIRE)--Fortune Brands Innovations, Inc. (NYSE: FBIN or "Fortune Brands" or the "Company"), an industry-leading home, security and digital products company, today announced second quarter 2026 results. "Our second quarter results were in line with expectations, and we continue to focus on improving execution. Since stepping into the role, I have spent time with our business teams and engaged in initial conversations with customers and channel partners. I have been impressed with the underlying strength of our brands and portfolio, and I see real opportunity to expand our position in the market across all of our businesses. Our teams are moving with urgency to serve our customers better, bring greater discipline to our cost base, refocus resources on our core businesses and generate sustainable growth. Our updated full year guidance reflects investments to execute on these opportunities," said Fortune Brands Chief Executive Officer Jesse Singh. "I believe the company's long-term potential is significant, and I am confident that with the right focus and investment, we can set the company up for a stronger future." Balance Sheet and Cash Flow The Company ended the quarter with a strong balance sheet, liquidity of approximately $1.1 billion and net debt to EBITDA before charges and gains of 2.7x. In the quarter, the Company generated $202.8 million in operating cash flow and $179.3 million in free cash flow, while repurchasing $2 million of its shares. As of the end of the second quarter 2026: 2026 Full-Year Guidance "Overall, the commercial performance of our business and the operating environment have been consistent with our previous outlook. Looking to the second half of the year, we have updated our full-year 2026 guidance and financial assumptions to reflect the benefit of net tariff refunds1, as well as additional investments to enhance execution. We expect net tariff refunds1 to benefit full year Operating Income and EPS by $81 million and $0.52, respectively. Excluding this benefit, our full year guidance reflects our intent to fund incremental near-term investments to improve service levels and accelerate new product development," said Fortune Brands Interim Chief Financial Officer Ashley George. 2026 Financial Guidance 2026 Market and Financial Assumptions For certain forward-looking non-GAAP measures (as used in this press release, operating margin before charges / gains and EPS before charges / gains), the Company is unable to provide a reconciliation to the most comparable GAAP financial measure because the information needed to reconcile the non-GAAP financial measure to the GAAP financial measure is unavailable due to the inherent difficulty of forecasting the timing and / or amount of various items that have not yet occurred, including the high variability and low visibility with respect to gains and losses associated with our defined benefit plans, which are excluded from EPS before charges / gains and restructuring and other charges, which are excluded from operating margin before charges / gains and EPS before charges / gains. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with the Company’s accounting policies for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated consistent with the relevant definitions and assumptions. For a reconciliation of full year 2026 free cash flow guidance to full year 2026 operating cash flow guidance, see the table entitled "Free Cash Flow" below. Conference Call Details Today at 5:00 p.m. ET, Fortune Brands will host an investor conference call to discuss results. A live internet audio webcast of the conference call and earnings presentation will be available on the Fortune Brands website at ir.fbin.com/upcoming-events. It is recommended that listeners log on at least 10 minutes prior to the start of the call. A recorded replay of the call will be made available on the Company’s website shortly after the call has ended. About Fortune Brands Innovations Fortune Brands Innovations, Inc. (NYSE: FBIN) is an industry-leading home, security and digital products company whose purpose is to elevate every life by transforming spaces into havens. The Company makes innovative products for residential and commercial environments, with a growing focus on digital solutions and products that add luxury, contribute to safety and enhance sustainability. The Company’s trusted brands include Moen, House of Rohl, Aqualisa, SpringWell, Therma-Tru, Larson, Fiberon, Master Lock, Sentry Safe and Yale residential. Learn more at www.fbin.com. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition in addition to statements regarding our strategies and investments to enhance execution and realign our business, our expectations for the markets in which we operate, expected impacts from recently-announced organizational and leadership changes, ongoing succession planning, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the other potential impacts of inflation, including consumer spending, expected capital spending, expected pension contributions or de-risking initiatives, the expected impact of acquisitions, dispositions and other strategic transactions, the anticipated impact of recently issued accounting standards on our financial statements, the anticipated impact of future tariff refunds and other matters that are not historical in nature. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," "outlook," "positioned," "confident," "opportunity," "focus," "on track" and similar expressions or future or conditional verbs such as "will," "should," "would," "may," and "could" are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on current expectations, estimates, assumptions and projections of our management about our industry, business and future financial results, available at the time this press release is issued. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements, including but not limited to: (i) our reliance on the North American and Chinese home improvement, repair and remodel and new home construction activity levels, (ii) the housing market, downward changes in the general economy, unfavorable interest rates or other business conditions, (iii) the competitive nature of consumer and trade brand businesses, (iv) our ability to execute on our strategic plans and the effectiveness of our strategies in the face of business competition, (v) our reliance on key customers and suppliers, including wholesale distributors and dealers and retailers, (vi) risks associated with our recent leadership changes and our search processes to identify additional permanent members of senior management, (vii) risks relating to rapidly evolving technological change, (viii) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (ix) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (x) delays or outages in our information technology systems or computer networks or breaches of our information technology systems or other cybersecurity incidents, (xi) risks associated with doing business globally, including changes in trade-related tariffs (including recent U.S. tariffs announced or imposed on China, Canada, Mexico and other countries and any reciprocal actions taken by such countries) and risks with uncertain trade environments, (xii) risks associated with the disruption of operations, including as a result of severe weather events, (xiii) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xiv) risks associated with strategic acquisitions, divestitures and joint ventures, including difficulties integrating acquired companies and the inability to achieve the expected financial results and benefits of transactions, (xv) impairments in the carrying value of goodwill or other acquired intangible assets, (xvi) risks of increases in our defined benefit-related costs and funding requirements, (xvii) our ability to attract and retain qualified personnel and other labor constraints, (xviii) the effect of climate change and the impact of related changes in government regulations and consumer preferences, (xix) risks associated with environmental, social and governance matters, (xx) potential liabilities and costs from claims and litigation, (xxi) changes in government and industry regulatory standards, (xxii) future tax law changes or the interpretation of existing tax laws, and (xxiii) our ability to secure and protect our intellectual property rights. These and other factors are discussed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 27, 2025. We undertake no obligation to, and expressly disclaim any such obligation to, update, amend, revise or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise, except as required by law. Use of Non-GAAP Financial Information This press release includes measures not derived in accordance with generally accepted accounting principles ("GAAP"), such as diluted earnings (loss) per share before charges / gains, operating income (loss) before charges / gains, operating margin before charges / gains, net debt, net debt to EBITDA before charges / gains, net sales excluding the impact of China, Outdoors net sales excluding the impact of Fiberon and free cash flow. These non-GAAP measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP and may also be inconsistent with similar measures presented by other companies. Reconciliations of these measures to the applicable most closely comparable GAAP measures, and reasons for the Company’s use of these measures, are presented in the attached pages. RECONCILIATION OF DILUTED EPS FROM CONTINUING OPERATIONS BEFORE CHARGES/(GAINS) For the thirteen weeks ended June 27, 2026, diluted EPS before charges/(gains) is calculated as income from continuing operations on a diluted per-share basis, excluding $8.1 million ($6.1 million after tax or $0.05 per diluted share) of restructuring charges, $2.9 million ($2.1 million after tax or $0.02 per diluted share) of other charges/gains, $229.3 million ($172.0 million after tax or $1.44 per diluted share) of asset impairment charges, $3.0 million ($2.2 million after tax or $0.02 per diluted share) of net costs relating to a manufacturing facility fire and $1.3 million ($1.0 million after tax or $0.01 per diluted share) of costs associated with governance advisory services and leadership changes. For the twenty-six weeks ended June 27, 2026, diluted EPS before charges/(gains) is calculated as income from continuing operations on a diluted per-share basis, excluding $12.5 million ($9.3 million after tax or $0.08 per diluted share) of restructuring charges, $4.7 million ($3.4 million after tax or $0.03 per diluted share) of other charges/gains, $229.3 million ($172.0 million after tax or $1.44 per diluted share) of asset impairment charges, $6.6 million ($4.9 million after tax or $0.04 per diluted share) of net costs relating to a manufacturing facility fire and $43.6 million ($33.4 million after tax or $0.28 per diluted share) of costs associated with governance advisory services and leadership changes. For the thirteen weeks ended June 28, 2025, the diluted EPS before charges/(gains) is calculated as income from continuing operations on a diluted per-share basis, excluding $13.7 million ($12.7 million after tax or $0.10 per diluted share) of restructuring charges and $13.7 million ($8.1 million after tax or $0.07 per diluted share) of other charges/(gains). For the twenty-six weeks ended June 28, 2025, the diluted EPS before charges/(gains) is calculated as income from continuing operations on a diluted per-share basis, excluding $38.5 million ($29.7 million after tax or $0.25 per diluted share) of restructuring charges and $27.8 million ($20.7 million after tax or $0.17 per diluted share) of other charges/(gains). Definitions of Terms: Non-GAAP Measures (a) Operating income (loss) before charges/gains is calculated as operating income (loss) derived in accordance with U.S. generally accepted accounting principles ("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) Free cash flow is cash flow from operations calculated in accordance with U.S. generally accepted accounting principles ("GAAP") less capital expenditures. 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. (c) EBITDA before charges/gains is calculated as net income (loss) in accordance with GAAP, excluding depreciation, amortization of intangible assets, restructuring and other charges/gains, interest expense 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) Diluted earnings (loss) per share from continuing operations before charges/gains is calculated as income from continuing operations on a diluted per-share basis, excluding restructuring and other charges/gains. This measure is not in accordance with GAAP. Management uses this measure to evaluate the Company's overall performance and believes it provides investors with helpful supplemental information about the Company's underlying performance from period to period. However, this measure may not be consistent with similar measures presented by other companies. (e) Operating margin is calculated as the operating income in accordance with GAAP, divided by the GAAP net sales. The operating margin before charges/gains is calculated as the operating income, excluding restructuring and other charges/gains, divided by the GAAP net sales. The operating margin before charges/gains is not a measure derived in accordance with GAAP. Management uses this measure to evaluate the returns generated by the Company and its business segments. Management believes that this measure provides investors with helpful supplemental information about the Company's underlying performance from period to period. However, this measure may not be consistent with similar measures presented by other companies. (f) For the thirteen and twenty-six weeks ended June 27, 2026, impairment charges of $228.7 million were recorded related to the Fiberon asset group within the Outdoors segment. The impairment charge was related to certain identifiable intangible assets as well as property and equipment. For the thirteen and twenty-six weeks ended June 27, 2026, impairment charges of $0.6 million were recorded for certain property and equipment within the Water segment. For the twenty-six weeks ended December 27, 2025, impairment charges of $53.6 million were recorded related to the classification of certain assets to equal their fair value, less estimated costs to sell. (g) For the thirteen and twenty-six weeks ended June 27, 2026, we recognized $3.0 million and $6.6 million, respectively, related to a fire at one of our manufacturing facilities within the Outdoors segment. For the twenty-six weeks ended December 27, 2025, we recognized $21.1 million related to a fire at one of our manufacturing facilities within the Outdoors segment. (h) For the twenty-six weeks ended December 27, 2025, professional fees incurred related to ongoing transformation initiatives was $0.7 million at Corporate. (i) For the thirteen and twenty-six weeks ended June 27, 2026, the Company incurred charges of $1.3 million and $43.6 million, respectively, associated with governance advisory services and leadership transitions. (j) Net sales excluding the impact of China sales is net sales derived in accordance with GAAP excluding the impact of China sales. Management uses this measure to evaluate the overall performance of its segments and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the Company and its reportable segments from period to period. This measure may be inconsistent with similar measures presented by other companies. (k) Outdoors net sales excluding the impact of Fiberon sales is net sales for the Outdoors segment derived in accordance with GAAP excluding the impact of Fiberon sales. On May 27, 2026 the Company announced it initiated a formal strategic review of the Fiberon business. Management uses this measure to evaluate the overall performance of the Outdoors segment and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the segment from period to period. This measure may be inconsistent with similar measures presented by other companies. (l) Net debt is calculated as long-term debt less cash and cash equivalents. Net debt is a measure not derived in accordance with GAAP. Management believes this supplemental measure is useful as it reflects the Company's debt obligations after considering cash and cash equivalents available to repay such obligations. (m) Net debt-to-EBITDA before charges/gains ratio is calculated as net debt divided by EBITDA before charges/gains for the trailing 52 weeks. Management believes net debt-to-EBITDA before charges/gains is a useful measure of the Company's leverage position because it provides investors with helpful supplemental information about the Company's ability to service and repay outstanding debt using earnings from the underlying performance of the Company. This measure may be inconsistent with similar measures presented by other companies. Additional Information: For certain forward-looking non-GAAP measures (as used in this press release, operating margin before charges / gains and EPS before charges / gains), the Company is unable to provide a reconciliation to the most comparable GAAP financial measure because the information needed to reconcile the non-GAAP financial measure to the GAAP financial measure is unavailable due to the inherent difficulty of forecasting the timing and / or amount of various items that have not yet occurred, including the high variability and low visibility with respect to gains and losses associated with our defined benefit plans, which are excluded from EPS before charges / gains and restructuring and other charges, which are excluded from operating margin before charges / gains and EPS before charges / gains. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with the Company’s accounting policies for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated consistent with the relevant definitions and assumptions. For a reconciliation of full year 2026 free cash flow guidance to full year 2026 operating cash flow guidance, see the table entitled "Free Cash Flow". View source version on businesswire.com: https://www.businesswire.com/news/home/20260804786639/en/ Contacts INVESTOR CONTACT:Curt [email protected]

Fortune Brands Innovations (FBIN) came out with quarterly earnings of $1.35 per share, beating the Zacks Consensus Estimate of $0.81 per share. This compares to earnings of $1 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +66.67%. A quarter ago, it was expected that this maker of products for the home, like faucets, cabinets, windows and doors would post earnings of $0.53 per share when it actually produced earnings of $0.53, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Fortune Brands Innovations, which belongs to the Zacks Building Products - Air Conditioner and Heating industry, posted revenues of $1.15 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.75%. This compares to year-ago revenues of $1.2 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Fortune Brands Innovations shares have added about 4.3% since the beginning of the year versus the S&P 500's gain of 11%. While Fortune Brands Innovations has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Fortune Brands Innovations was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.94 on $1.12 billion in revenues for the coming quarter and $3.14 on $4.39 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products - Air Conditioner and Heating is currently in the top 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Tecogen Inc. (TGEN), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 12. This company is expected to post quarterly loss of $0.09 per share in its upcoming report, which represents a year-over-year change of -50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Tecogen Inc.'s revenues are expected to be $5.92 million, down 18.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fortune Brands Innovations, Inc. (FBIN) : Free Stock Analysis Report Tecogen Inc. (TGEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research