Fortune Brands Innovations, Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 12 February 2026: press release. Guidance figures: 16 new. The quarter’s numbers.

Read the filing

Key takeaways

• Sales down 2 percent, flat ex-China: Q4 2025 net sales were $1,077.5 million, down 2.4 percent. Excluding the impact of China, sales were flat; the reconciliation shows a 0.2 percent decline. Source
• EPS $0.63, $0.86 before charges: Diluted EPS was $0.63, down 25.0 percent from $0.84. Before charges and gains, EPS was $0.86, down 12.2 percent from $0.98. Source
• Full-year EPS before charges $3.61: Full-year diluted EPS was $2.47, down 34.1 percent. Before charges and gains it was $3.61, down 12.4 percent from $4.12. Source
• Outdoors margin fell with fire loss: Outdoors Q4 net sales were $294.9 million, down 2.7 percent. Operating margin before charges fell 400 basis points to 14.2 percent; the segment recognized an $18.1 million fire loss in the quarter. Source
• Full-year free cash flow $366.8 million: Full-year free cash flow was $366.8 million, a cash conversion ratio of 122.8 percent on net income of $298.8 million. Source
• First 2026 ranges issued: The release gives full-year 2026 ranges for net sales, EPS before charges and gains, margins and cash flow. The prior release gave 2025 guidance only. Source
• Margin and cash ranges set: Operating margin before charges and gains is guided at 14.5 to 15.5 percent, cash flow from operations at $540 million to $560 million, and free cash flow at $400 million to $450 million. Source
• Cost structure refinement under way: Management says it is taking decisive actions to refine its cost structure, optimize operations and improve efficiency, and is identifying further ways to improve performance. Source

“In 2025, we outperformed our end market, and we remain confident in our strategy and will continue to invest in growth - specifically in brand building, meaningful innovation, and investing in our people.”

Fortune Brands Chief Executive Officer Nicholas Fink

Guidance

What changed from last quarter

• New guidance: Full-year 2026 guidance ranges are given in this release; the prior release gave 2025 guidance only. Source
• New: Management says it is taking decisive actions to refine its cost structure, optimize operations and improve efficiency. Source
• New: Management says it is taking actions to optimize its footprint and sharpen resource allocation. Source
• New: The company recently extended its $1.25 billion senior unsecured revolving credit facility for an additional five-year term. Source

Fourth quarter 2025 results

• Sales down 2 percent, flat ex-China: Q4 2025 net sales were $1,077.5 million, down 2.4 percent. Excluding the impact of China, sales were flat; the reconciliation shows a 0.2 percent decline. Source
• EPS $0.63, $0.86 before charges: Diluted EPS was $0.63, down 25.0 percent from $0.84. Before charges and gains, EPS was $0.86, down 12.2 percent from $0.98. Source
• Operating income down 31.8 percent: GAAP operating income was $121.6 million, down 31.8 percent. Before charges and gains it was $158.3 million, down 12.8 percent, a 14.7 percent margin. Source
• Charges excluded from adjusted figures: Charges excluded from before-charges figures were restructuring $3.1 million, other charges $12.0 million, asset impairment $3.5 million and manufacturing fire $18.1 million, totaling $36.7 million. Source

Full-year 2025 results

• Full-year sales down 3 percent: Full-year net sales were $4,463.2 million, down 3.2 percent. Excluding the impact of China, full-year sales were down 1 percent. Source
• Full-year EPS before charges $3.61: Full-year diluted EPS was $2.47, down 34.1 percent. Before charges and gains it was $3.61, down 12.4 percent from $4.12. Source
• Full-year operating margin 15.7 percent: Operating margin before charges and gains was 15.7 percent, down 120 basis points. GAAP operating margin was 11.6 percent. Source

“Our full-year 2026 guidance reflects a measured planning approach, given continued uncertainty around the timing and pace of improvement in our end markets.”

Fortune Brands Chief Financial Officer Jon Baksht

Segment and China sales

• Water sales down 4.3 percent in Q4: Water Innovations Q4 net sales were $616.8 million, down 4.3 percent, with operating margin before charges at 22.8 percent. Excluding the impact of China, Water sales fell 0.6 percent. Source
• Outdoors margin fell with fire loss: Outdoors Q4 net sales were $294.9 million, down 2.7 percent. Operating margin before charges fell 400 basis points to 14.2 percent; the segment recognized an $18.1 million fire loss in the quarter. Source
• Security sales up 5.9 percent in Q4: Security Q4 net sales were $165.8 million, up 5.9 percent. Operating margin before charges rose 410 basis points to 13.4 percent; GAAP margin was 8.1 percent. Source
• Full-year segment sales mixed: Full-year Water Innovations net sales were $2,447.6 million, down 4.6 percent; Outdoors $1,323.0 million, down 2.0 percent; Security $692.6 million, down 0.2 percent. Source
• China effect on total sales: On a GAAP basis total company Q4 net sales changed by (2.4%). The reconciliation shows 2.2% excluding China sales and (0.2%) excluding the impact of China. Source

Costs, charges and restructuring

• Corporate expense rose in Q4: Corporate expense on a GAAP basis was $52.7 million in Q4, up from $41.1 million a year earlier; before charges and gains it was $46.3 million. Source
• Restructuring tied to office consolidation: Restructuring charges were $3.1 million in Q4 and $52.4 million for the year. Management attributes them mainly to consolidating U.S. regional offices into one campus headquarters. Source
• Product costs and SG&A rose: Q4 cost of products sold rose 1.5 percent to $605.3 million, and SG&A rose 5.1 percent to $325.2 million, while net sales fell 2.4 percent. Source
• Impairment on held-for-sale assets: Asset impairment charges of $3.5 million in Q4 and $53.6 million for the year relate to certain assets classified as held for sale. Source

Cash flow and balance sheet

• Q4 operating cash flow $208.2 million: Q4 operating cash flow was $208.2 million and free cash flow $183.7 million, after $24.5 million of capital expenditures. Source
• Full-year free cash flow $366.8 million: Full-year free cash flow was $366.8 million, a cash conversion ratio of 122.8 percent on net income of $298.8 million. Source
• Net debt 2.6 times EBITDA: Net debt was $2.3 billion, or 2.6 times EBITDA before charges and gains. Cash was $264.0 million, $862.6 million was available under the revolver, and liquidity was $1,126.6 million. Source
• Capital spending lower than 2024: Full-year capital expenditures were $111.8 million, against $193.3 million in 2024. Source

Capital returns and debt

• Buybacks and dividends in 2025: Treasury stock purchases were $247.8 million for the year, against $240.4 million; dividends to stockholders were $120.6 million, against $119.6 million. Source
• Debt shifted to long term: Short-term debt was nil at year-end against $499.6 million a year earlier, while long-term debt rose to $2,544.9 million from $2,173.7 million. Source
• Diluted share count lower: Diluted average shares were 120.4 million in Q4 against 125.1 million a year earlier, and 121.2 million for the year against 125.7 million. Source

2026 guidance and planning

• First 2026 ranges issued: The release gives full-year 2026 ranges for net sales, EPS before charges and gains, margins and cash flow. The prior release gave 2025 guidance only. Source
• Margin and cash ranges set: Operating margin before charges and gains is guided at 14.5 to 15.5 percent, cash flow from operations at $540 million to $560 million, and free cash flow at $400 million to $450 million. Source
• Segment ranges set for three segments: Water Innovations net sales are guided flat to up 2.0 percent, Outdoors down 0.5 percent to up 1.5 percent, and Security flat to up 3.0 percent, each with a margin range. Source
• Other items guided: Corporate expense is $155 million to $165 million, interest expense $110 million to $115 million, capex $110 million to $140 million, tax rate 24.0 to 24.5 percent, and share count 120.0 million to 120.5 million. Source

Market assumptions for 2026

• Global, U.S. and R&R markets down: Management assumes global, U.S. and U.S. repair and remodel markets are each down low single digits in 2026. Source
• SFNC and China assumed lower: U.S. SFNC market assumed down mid single digits, and China market down low double digits. Source
• External environment described as uncertain: Management describes the external environment as uncertain and says it remains focused on outperforming its end markets while executing initiatives to drive long-term margin improvements. Source

Strategy, cost actions and investment

• Cost structure refinement under way: Management says it is taking decisive actions to refine its cost structure, optimize operations and improve efficiency, and is identifying further ways to improve performance. Source
• Footprint optimization: Management says it is taking actions to optimize its footprint and sharpen resource allocation toward its highest-growth areas. Source
• Discipline while positioning for growth: Management says it is committed to operating with discipline today while positioning the business for when markets return to growth. Source

Risks management discussed

• Demand: Management cites continued uncertainty over the timing and pace of improvement in its end markets. Source
• External: Management describes the external environment as uncertain for 2026 and says the guidance reflects this. Source
• Operational: A fire at an Outdoors manufacturing plant produced losses of $18.1 million in Q4, net of probable insurance recoveries. Source

Earlier plans management reported on

• Met: Management says the company outperformed its end market in 2025. Source
• Not stated: The prior release expected this; this release reports net debt to EBITDA before charges and gains of 2.6 times.
• Not stated: The prior release expected the year near the low end of the prior range; this release reports full-year EPS before charges and gains of $3.61.
• Not stated: The prior release said the company was positioned to deliver on its commitments and build momentum into 2026.

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.