Key Highlights

  • Sales fell 3.1% to USD 1,113.7 million, and GAAP EPS was USD 0.42 after a USD 0.47 asset Impairment charge.
  • EPS before charges was USD 1.14, including a USD 0.28 tax benefit and USD 0.14 of Tariff refunds.
  • Operating margin before charges fell 390 basis points to 14.0%, while free Cash Flow was USD 331.1 million.
  • Actions include selling Fiberon, exiting commercial operations in China and rationalizing the EMEA footprint of a Water business.

Quarter Below Target

Fortune Brands Innovations, Inc. (NYSE:FBIN), a home, security and digital products company, reported third-quarter 2026 sales of USD 1,113.7 million, a decrease of 3.1%, or 2.4% excluding China. GAAP EPS was USD 0.42, which included an asset impairment charge of USD 0.47. EPS before charges and gains was USD 1.14, up 4.6%, but that figure included a USD 0.28 net tax benefit and USD 0.14 of net tariff refunds.

Operating income before charges fell 24.6% to USD 155.5 million, and the margin before charges was 14.0%, down 390 basis points. Chief Executive Officer Jesse Singh said results were in line with the company outlook excluding the tax and tariff benefits but not where they need to be, and that the main issue has been the company's own execution.

Analyst estimates were EPS of USD 0.74 against reported EPS of USD 1.14, and Revenue of USD 1.12 billion against reported revenue of USD 1.11 billion.

Segment Results

Water Innovations sales were USD 584.5 million, down 5.5% or 4.3% excluding China, with an Operating Margin before charges of 17.6%, down 680 basis points. Outdoors sales were USD 347.4 million, up 0.8%, or up 3.4% excluding Fiberon, with a margin before charges of 15.3%. Security sales were USD 181.8 million, down 2.4%, with a margin before charges of 21.3%, up 350 basis points.

Singh said service levels improved by 10 percentage points in the quarter, with Fill rates in the high-90% range entering the fourth quarter. The company realigned around customer-focused segments, expects more than 80% of its salaried workforce to directly support a specific Business by year end versus 40% at the start of the year, and added a new chief financial officer, chief information officer and chief legal officer.

Portfolio Actions and Cash Flow

The company agreed to sell Fiberon, is exiting commercial operations in China with completion by the third quarter of 2027, and is rationalizing the EMEA operating footprint of a Water business by the fourth quarter of 2027. Together these businesses generate an annualized operating loss of USD 50 million to USD 55 million on revenue of USD 320 million to USD 330 million. The company is progressing toward USD 70 million of annualized SG&A savings by the first quarter of 2027.

Operating cash flow was USD 347.0 million and free cash flow was USD 331.1 million, while the company repurchased USD 40 million of shares. Net Debt was USD 2.1 billion, or 2.5 times EBITDA before charges and gains, cash was USD 231 million and USD 1.1 billion was available under the revolving Credit facility. Management sees single-family new construction down mid to high single digits and repair and remodel down low single digits for the year, and updated its full-year 2026 guidance.

Items to Follow

Management projects incrementally lower fourth-quarter revenue on the portfolio actions, lower new construction and a reduction in channel inventory.