Latest news with #FBIN
Yahoo
20-05-2025
- Business
- Yahoo
FBIN Q1 Earnings Call: Tariff Pressures and Demand Uncertainty Weigh on Results
Home and security products company Fortune Brands (NYSE:FBIN) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 6.9% year on year to $1.03 billion. Its non-GAAP profit of $0.66 per share was in line with analysts' consensus estimates. Is now the time to buy FBIN? Find out in our full research report (it's free). Revenue: $1.03 billion vs analyst estimates of $1.06 billion (6.9% year-on-year decline, 2.8% miss) Adjusted EPS: $0.66 vs analyst estimates of $0.66 (in line) Adjusted EBITDA: $179.6 million vs analyst estimates of $180.9 million (17.4% margin, 0.7% miss) Operating Margin: 9.4%, down from 14% in the same quarter last year Free Cash Flow was -$112.6 million compared to -$135.9 million in the same quarter last year Organic Revenue fell 6.8% year on year (-1.9% in the same quarter last year) Market Capitalization: $6.69 billion Fortune Brands' first quarter results were shaped by persistent demand softness and significant external pressures, particularly from new U.S. tariffs impacting its home and security product lines. Management highlighted that consumer uncertainty and inventory reductions, especially in the water segment, led to lower sales, while margin performance was supported by ongoing cost control and pricing actions. CEO Nicholas Fink noted, 'Our teams remain focused on our key priorities amidst a volatile environment and delivered margin results in line with our expectations while continuing to invest in a narrow set of long-term strategic initiatives.' For the outlook, Fortune Brands refrained from issuing detailed annual guidance, instead providing a framework reflecting various volume scenarios due to unpredictable consumer behavior. Management emphasized their confidence in mitigating the expected $200 million tariff impact this year and outlined a multi-pronged strategy leveraging supply chain shifts, cost-out activities, and pricing. CFO David Barry explained that while tariff mitigation is underway, the biggest unknown remains the pace of consumer demand recovery, and the company's guidance now incorporates both low and high single-digit volume decline scenarios. Management cited external headwinds and internal strategic actions as key factors shaping first quarter performance. The company's approach to tariffs, supply chain flexibility, and ongoing investment in digital products were central themes throughout the call. Tariff Mitigation Actions: Management outlined a strategy to offset $200 million in 2025 tariff costs, focusing on shifting supply chains out of China, executing cost reductions, and targeted price increases. About 60% of cost of goods sold now originates in the U.S., and management expects China exposure to be reduced to roughly 10% by year-end. Digital Business Momentum: The digital portfolio, including the Flo leak detection device and Yale smart locks, showed robust growth. The company added three new insurance partnerships for Flo, and sales of the device rose 180% year-over-year. Over 200,000 digital device activations occurred in Q1, and management reiterated confidence in reaching $300 million in digital sales for 2025. Headquarters Consolidation: The consolidation of U.S. office associates into a new headquarters in Deerfield, Illinois, is progressing ahead of plan, enabling greater operational efficiency and cost control. Management cited improved talent retention and recruitment as a result of this move. Brand and Product Refreshes: New marketing campaigns for Master Lock and SentrySafe, the rollout of Larson Perfect aisle, and updated Moen product lines were highlighted as initiatives supporting sales and brand strength. These product launches are expected to drive growth in later quarters. Competitive Supply Chain Position: Fortune Brands' North American manufacturing footprint was emphasized as a differentiator, particularly as competitors in security and outdoors rely more heavily on Chinese imports, which are now subject to higher tariffs. Management expects this advantage to help capture market share as the year progresses. Management's outlook for the remainder of the year centers on mitigating tariff impacts, executing cost controls, and capitalizing on competitive supply chain advantages, while consumer demand remains the largest source of uncertainty. Supply Chain Flexibility: The company's ongoing shift to a more North American–centric supply chain is expected to reduce exposure to tariffs and provide stability, particularly in the event of continued geopolitical disruptions. Strategic Pricing and Cost Control: Management intends to offset tariff-related costs with mid-single-digit price increases and continued cost-out initiatives, aiming to defend operating margins even if volumes decline. Digital and Product Innovation: Continued growth in digital products, including new insurance partnerships and subscription models, is expected to provide incremental sales and diversify revenue streams, helping to buffer against cyclical demand in core categories. Phil Ng (Jefferies): Asked how headquarters consolidation and management changes would improve agility. Management explained that the move gives them more control over hiring pace and flexibility to adjust costs as market conditions evolve. John Lovallo (UBS): Inquired about confidence in achieving digital sales targets and balancing digital initiatives with core business performance. Management expressed strong confidence in digital momentum and highlighted upcoming core business innovations. Trevor Allinson (Wolfe Research): Sought clarification on China supply chain exposure and whether the strategy would change if tariffs were reduced. Management stated the supply chain would remain flexible, with a continued emphasis on North American production. Susan McClary (Goldman Sachs): Asked about leveraging U.S. manufacturing to gain market share amid disruptions. Management identified opportunities in the outdoors and security segments, where competitors are more exposed to tariffs. Michael Rehaut (JPMorgan): Questioned the assumptions behind the pricing and volume guidance framework. Management detailed the interplay between price increases, cost mitigation, and expectations for volume declines across scenarios. Looking ahead, the StockStory team will monitor (1) the pace and success of tariff mitigation actions and supply chain adjustments, (2) the continued momentum in digital product sales and new partnerships, and (3) signs of demand stabilization or recovery in core segments like water and outdoors. Execution on headquarters consolidation and the impact of new product launches will also be important indicators of Fortune Brands' ability to navigate ongoing market uncertainty. Fortune Brands currently trades at a forward P/E ratio of 13×. In the wake of earnings, is it a buy or sell? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today. 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Yahoo
09-05-2025
- Business
- Yahoo
Why Fortune Brands Innovations, Inc. (FBIN) Nosedived on Wednesday
We recently published an article titled . In this article, we are going to take a look at where Fortune Brands Innovations, Inc. (NYSE:FBIN) stands against the other stocks. The stock market bounced back from the previous day's losses, with all major indices finishing higher as investors cheered the central bank's decision to keep interest rates unchanged. On Wednesday afternoon, the Federal Reserve kept rates steady at a range of 4.25 percent to 4.5 percent, saying that it was not in a hurry to cut rates and could still 'wait and see' the impacts of President Donald Trump's tariff policies. The Dow Jones rallied by 0.70 percent, the S&P 500 increased by 0.43 percent, and the Nasdaq grew by 0.27 percent. Beyond the major indices, bucked a broader market optimism as investors sold off on a series of disappointing news. To come up with the list, we considered only the stocks with a $2-billion market capitalization and $5-million trading volume. On-site technicians inspecting a water management system. Fortune Brands Innovations, Inc. (NYSE:FBIN) lost 8.79 percent of its valuation for a third straight day on Wednesday to close at $48.16 each after a disappointing earnings performance for the first quarter of the year. In its financial statement, Fortune Brands Innovations, Inc. (NYSE:FBIN) said that net income fell by 47 percent to $51.4 million from $96.4 million in the same period last year. Revenues also dropped by 7 percent to $1.033 billion from $1.109 billion year-on-year. Further weighing down on sentiment was the company's lack of revenue guidance for the upcoming quarters amid the ongoing uncertainties globally. However, it said that its teams are working on mitigating the expected impact of tariffs quickly and strategically through sourcing moves, cost-out opportunities, and strategic pricing. 'The company remains confident in its long-term strategy of focusing on categories driven by brands and innovation, with an emphasis on attractive areas of its core and acceleration in its digital strategy,' it said. Overall FBIN ranks 7th on our list of Wednesday's worst performers. While we acknowledge the potential of FBIN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than FBIN but that trades at less than 5 times its earnings, check out our report about this . READ NEXT: and . Disclosure: None. This article is originally published at .
Yahoo
29-03-2025
- Business
- Yahoo
Fortune Brands (FBIN): Buy, Sell, or Hold Post Q4 Earnings?
Fortune Brands has gotten torched over the last six months - since September 2024, its stock price has dropped 29.4% to $62.51 per share. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation. Is now the time to buy Fortune Brands, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team's opinion, it's free. Even with the cheaper entry price, we're cautious about Fortune Brands. Here are three reasons why there are better opportunities than FBIN and a stock we'd rather own. Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products. In addition to reported revenue, organic revenue is a useful data point for analyzing Home Construction Materials companies. This metric gives visibility into Fortune Brands's core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement. Over the last two years, Fortune Brands's organic revenue averaged 4.2% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Fortune Brands might have to lean into acquisitions to grow, which isn't ideal because M&A can be expensive and risky (integrations often disrupt focus). Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions. Fortune Brands's EPS grew at an unimpressive 4.2% compounded annual growth rate over the last five years, lower than its 6.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded. Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king. As you can see below, Fortune Brands's margin dropped by 8.4 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Fortune Brands's free cash flow margin for the trailing 12 months was 10.3%. Fortune Brands doesn't pass our quality test. Following the recent decline, the stock trades at 13.8× forward price-to-earnings (or $62.51 per share). While this valuation is fair, the upside isn't great compared to the potential downside. There are more exciting stocks to buy at the moment. Let us point you toward our favorite semiconductor picks and shovels play. With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we're laser-focused on finding the best stocks for this upcoming cycle. Put yourself in the driver's seat by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
