Fortune Brands 39-week net income falls to $51.6M
A $303.1 million year-to-date impairment charge included $223.3 million related to Fiberon’s asset group.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Fortune Brands Innovations, Inc. reported third-quarter net sales of $1,113.7 million and net income of $49.9 million for the thirteen weeks ended September 26, 2026, compared with $1,149.2 million and $70.8 million a year earlier. For the thirty-nine weeks, net sales were $3,278.9 million versus $3,385.7 million, and net income was $51.6 million versus $222.4 million; operating income was $111.7 million versus $394.4 million.
Thirty-nine-week asset impairment charges totaled $303.1 million, including $223.3 million related to the Fiberon asset group and $9.7 million for its indefinite-lived tradename. The board approved plans to exit a Water segment commercial business serving markets primarily in China and other Asian jurisdictions, and to rationalize a Water business’s EMEA operating footprint. Operating cash flow was $430.6 million versus $270.4 million; long-term debt was $2,296.6 million as of September 26, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointOperating cash flow was $430.6 million, versus $270.4 million in the prior-year period.
Negative
- Moderate pointThirty-nine-week net income was $51.6 million, versus $222.4 million.
- Minor pointThirty-nine-week asset impairment charges totaled $303.1 million.
Filing Explained
Water write-downs affect property, plant and equipment, customer relationships and a tradename; recognized Asia-exit charges have further costs expected through 2027.
The report shows the already-approved Asia commercial exit has entered the cost-incurrence phase, while Water impairment testing has produced recognized third-quarter charges that reduce reported earnings.
For one Water asset group, the company recorded
For the Asia exit, the company recognized
Key Figures
Key Terms
relief-from-royalty method financial
Level 3 fair value measurement financial
Commercial Paper Program financial
cash flow hedges financial
multi-period excess earnings method financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were FBIN’s third-quarter sales and net income?
What was the Fiberon impairment at FBIN?
What did FBIN approve for its Asia commercial business?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, at October 16, 2026 was
1
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirty-Nine and Thirteen Weeks Ended September 26, 2026 and September 27, 2025
(In millions, except per share amounts)
(Unaudited)
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Thirty-Nine Weeks Ended September 26, 2026 |
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Thirty-Nine Weeks Ended September 27, 2025 |
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Thirteen Weeks Ended September 26, 2026 |
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Thirteen Weeks Ended September 27, 2025 |
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Net sales |
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Cost of products sold |
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Selling, general and administrative expenses |
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Amortization of intangible assets |
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Asset impairment charges |
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Restructuring charges |
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Operating income |
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Interest expense |
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Other (income) expense, net |
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Income before taxes |
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Income tax (benefit) expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Basic earnings per common share |
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$ |
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$ |
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$ |
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$ |
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Diluted earnings per common share |
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$ |
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$ |
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$ |
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$ |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
2
FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
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September 26, 2026 |
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December 27, 2025 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable less allowance for credit losses of $ |
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Inventories |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease assets |
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Goodwill |
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Other intangible assets, net of accumulated amortization |
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Assets held for sale |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and equity |
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Current liabilities |
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Accounts payable |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Deferred income taxes |
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Accrued defined benefit plans |
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Operating lease liabilities |
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Other non-current liabilities |
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Total liabilities |
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Commitments and contingencies (see Note 17) |
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Stockholders' equity |
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Common stock(a) |
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Paid-in capital |
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Accumulated other comprehensive income |
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Retained earnings |
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Treasury stock |
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( |
) |
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( |
) |
Total stockholders' equity |
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Total liabilities and equity |
|
$ |
|
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$ |
|
||
(a)
See notes to condensed consolidated financial statements.
3
FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Thirty-Nine Weeks Ended September 26, 2026 and September 27, 2025
(In millions)
(Unaudited)
|
|
Thirty-Nine Weeks Ended September 26, 2026 |
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Thirty-Nine Weeks Ended September 27, 2025 |
|
||
Operating activities |
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Net income |
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$ |
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$ |
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Non-cash adjustments: |
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Depreciation |
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Amortization of intangibles |
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Non-cash lease expense |
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Stock-based compensation |
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Deferred taxes |
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( |
) |
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Asset impairment charges |
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Other operating activities, net |
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( |
) |
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Changes in operating assets and liabilities: |
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Increase in accounts receivable |
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( |
) |
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( |
) |
Decrease (increase) in inventories |
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( |
) |
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Increase in accounts payable |
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Increase in other assets |
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( |
) |
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( |
) |
Decrease in accrued expenses and other liabilities |
|
|
( |
) |
|
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( |
) |
Decrease in accrued taxes |
|
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( |
) |
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( |
) |
Net cash provided by operating activities |
|
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||
Investing activities |
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Capital expenditures (a) |
|
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( |
) |
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( |
) |
Proceeds from the disposition of assets |
|
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||
Other investing activities, net |
|
|
( |
) |
|
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|
Net cash used in investing activities |
|
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( |
) |
|
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( |
) |
Financing activities |
|
|
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||
Repayment of short-term debt |
|
|
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( |
) |
|
Issuance of long-term debt |
|
|
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|
||
Repayment of long-term debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the exercise of stock options |
|
|
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|
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|
||
Treasury stock purchases |
|
|
( |
) |
|
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( |
) |
Employee withholding taxes related to stock-based compensation |
|
|
( |
) |
|
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( |
) |
Dividends to stockholders |
|
|
( |
) |
|
|
( |
) |
Other financing activities, net |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of foreign exchange rate changes on cash |
|
|
( |
) |
|
|
|
|
Net decrease in cash and cash equivalents |
|
$ |
( |
) |
|
$ |
( |
) |
Cash, cash equivalents and restricted cash(b) at beginning of period |
|
$ |
|
|
$ |
|
||
Cash, cash equivalents and restricted cash(b) at end of period |
|
$ |
|
|
$ |
|
||
See notes to condensed consolidated financial statements.
4
FORTUNE BRANDS INNOVATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Thirty-Nine and Thirteen Weeks Ended September 26, 2026 and September 27, 2025
(In millions)
(Unaudited)
|
|
Common |
|
|
Paid-In |
|
|
Accumulated |
|
|
Retained |
|
|
Treasury |
|
|
Total |
|
||||||
Balance at December 28, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock options exercised |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Treasury stock purchases |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Dividends ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at September 27, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at December 27, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Stock options exercised |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Treasury stock purchases |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Dividends ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at September 26, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||||
|
|
Common |
|
|
Paid-In |
|
|
Accumulated |
|
|
Retained |
|
|
Treasury |
|
|
Total |
|
||||||
Balance at June 28, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Stock options exercised |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Treasury stock purchases |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Dividends ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at September 27, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at June 27, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Stock options exercised |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Treasury stock purchases |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Dividends ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance at September 26, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See notes to condensed consolidated financial statements.
5
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Principles of Consolidation
The Company is an industry leading home, security and digital products company whose purpose is to elevate every life by transforming spaces into havens that has a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications. References to “Fortune Brands,” “the Company,” “we,” “our” and “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.
The condensed consolidated financial statements and notes are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not contain certain information included in our annual audited consolidated financial statements and notes. The December 27, 2025 Condensed Consolidated Balance Sheet was derived from our audited consolidated financial statements but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). This Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 27, 2025.
The Condensed Consolidated Balance Sheet as of September 26, 2026, the related Condensed Consolidated Statements of Comprehensive Income and Equity for the thirty-nine weeks and thirteen weeks ended September 26, 2026, the related Condensed Consolidated Statements of Comprehensive Income and Equity for the thirty-nine weeks and thirteen weeks ended September 27, 2025, and the related Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 26, 2026 and September 27, 2025 are unaudited. The presentation of these financial statements requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. In the opinion of management, all adjustments necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year.
2. Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03 Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain expenses on an interim and annual basis in the notes to the financial statements. This standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this new standard on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06 Targeted Improvements to the Accounting for Internal-Use Software. The standard eliminates references to "development project stages" and clarifies the threshold to begin capitalizing internal-use software costs. The ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, with early adoption permitted. An entity may apply the amendments prospectively, retrospectively, or utilizing a modified transition approach. We are currently evaluating the impact of this new standard on our consolidated financial statements.
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Impairment
Fiberon. The Company announced on May 27, 2026 that, in collaboration with the Board of Directors, management initiated a formal strategic review of its Fiberon business. The review explored a range of strategic alternatives while Fiberon continues to operate its business, serve customers, and execute its commercial priorities.
The Company performed interim impairment tests for the Fiberon indefinite-lived tradename within the Outdoors segment as of June 27, 2026. As the strategic review process advanced and potential strategic alternatives were further evaluated, management concluded that a triggering event existed as of June 27, 2026. Fair value was estimated using the relief-from-royalty method, which estimates the value of the tradename by applying a market participant royalty rate to projected revenues attributable to the asset and discounting the resulting cash flows using a market participant discount rate. Significant assumptions utilized in the valuation include estimated future cash flows, a royalty rate, discount rates, long-term growth rates, and other market factors. The Company utilized a discount rate of
As of June 27, 2026, the Company performed a recoverability test of the Fiberon asset group within the Outdoors segment under ASC 360 – Property, Plant and Equipment, triggered by the advancement of the strategic review of the Fiberon business. The recoverability analysis incorporated probability-weighted estimates of undiscounted future cash flows associated with various strategic alternatives under evaluation. Based on this analysis, the Company concluded as of June 27, 2026 that the carrying value of the Fiberon asset group was not recoverable because the estimated undiscounted future cash flows were less than the carrying value of the asset group.
Because the carrying value of the Fiberon asset group was determined to be not recoverable as of June 27, 2026, the Company estimated the fair value of the Fiberon asset group to measure the impairment loss. The Company engaged third-party valuation specialists to assist in estimating the fair values of the Fiberon asset group. Fair value was determined by using market and cost approaches that utilized third-party data from various industry-accepted sources. Under the market approach, fair value reflects prices for comparable assets in an arm’s length transaction. The cost approach reflects the amount for which an asset could be replaced or reproduced in its current condition adjusted based on physical condition and economic age of the asset. The significant assumptions utilized in the cost approach are base replacement costs and trending factors. The estimated future cash flows of the strategic alternatives under evaluation and market participant assumptions represent a Level 3 fair value measurement due to the use of significant unobservable inputs and management assumptions.
During the twenty-six weeks ended June 27, 2026, the Company recorded asset impairment charges of $
Water Segment. On September 25, 2026, the Board of Directors approved a plan to rationalize the EMEA operating footprint of a business within the Water segment. The plan significantly changes the extent and manner in which certain of the business’s manufacturing assets will be used. Management concluded that this was a triggering event and performed an interim impairment test for an indefinite-lived tradename within the Water segment as of September 25, 2026. Fair value was estimated using the relief-from-royalty method, which estimates the value of the tradename by applying a market participant royalty rate to projected revenues attributable to the asset and discounting the resulting cash flows using a market participant discount rate. Based on the results of the analysis, the Company determined that there was no impairment. The Company also performed a recoverability test of the long-lived asset group in accordance with ASC 360. The estimated undiscounted cash flows of the asset group were less than its carrying value and, as a result, the Company measured the asset group at fair value. The Company engaged third-party valuation specialists to assist in estimating the fair value using market and income approaches. Under the market approach, fair value reflects prices for comparable assets in an arm’s length transaction. The income approach reflects the present value of future cash flows of the asset. Significant assumptions include orderly liquidation value factors under the market approach and discount rate under the income approach. The fair value of definite-lived customer relationship intangible asset was estimated using the multi-period excess earnings method, which measures the present value of incremental future cash flows attributable solely to the customer relationships after deducting charges for
7
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the use of contributory assets. Significant assumptions included forecasted revenues and customer retention rates. The estimated future cash flows and market participant assumptions represent a Level 3 fair value measurement due to the use of significant unobservable inputs and management assumptions. In the third quarter of 2026, the Company recorded a long-lived asset impairment of $
As of September 26, 2026, the Company performed a recoverability test of a second asset group within the Water segment under ASC 360, triggered by the decline in the asset group’s expected future cash flows relating to the usage of such asset group’s facility. The estimated undiscounted cash flows of the asset group were less than its carrying value and, as a result, the Company measured the asset group at fair value. The Company engaged third-party valuation specialists to assist in estimating the fair value using market and income approaches. Under the market approach, fair value reflects prices for comparable assets in an arm’s length transaction. The income approach reflects the present value of future cash flows of the asset. Significant assumptions included capitalization rate under the income approach and market-based comparable real estate transactions utilized in the market approach. The fair value of definite-lived customer relationship intangible asset was estimated using the multi-period excess earnings method, which measures the present value of incremental future cash flows attributable solely to the customer relationships after deducting charges for the use of contributory assets. Significant assumptions included forecasted revenues and customer retention rates. The fair value of the definite-lived tradename intangible asset was estimated using the relief-from-royalty method, which estimates the value of the tradename by applying a market participant royalty rate to projected revenues attributable to the asset and discounting the resulting cash flows using a market participant discount rate. The estimated future cash flows and market participant assumptions represent a Level 3 fair value measurement due to the use of significant unobservable inputs and management assumptions. In the third quarter of 2026, the Company recorded long-lived asset impairments of $
The fair value estimates used in the impairment analysis are sensitive to changes in assumptions, including projected future cash flows, a royalty rate, discount rates, long-term growth rates, market participant assumptions and the outcome of the strategic review process. Changes in these assumptions or future decisions regarding strategic alternatives could result in additional impairment charges in future periods.
4. Balance Sheet Information
Supplemental information on our balance sheets is as follows:
(In millions) |
|
September 26, 2026 |
|
|
December 27, 2025 |
|
||
Inventories: |
|
|
|
|
|
|
||
Raw materials and supplies |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished products |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Property, plant and equipment, gross |
|
$ |
|
|
$ |
|
||
Less: accumulated depreciation |
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Assets held for sale |
|
$ |
|
|
$ |
|
||
During the third quarter of 2025, we classified certain manufacturing assets as held for sale in connection with the strategic refocusing of the business toward areas with higher growth and profitability potential and the utilization of available capacity at existing manufacturing facilities. Upon classification as held for sale, we ceased recording depreciation and recognized an impairment charge of $
In connection with the Company’s decision to consolidate its U.S. regional offices into a single campus headquarters, assets with a carrying value of $
8
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
additional assets with a carrying value of $
Fair value was determined using a combination of market and income approaches based on valuation assumptions including certain Level 3 inputs. These assumptions included estimated sublease rental income, discount rates, market sales data and other market participant assumptions. The assets were reclassified from Property, plant and equipment, net to Assets held for sale in our Condensed Consolidated Balance Sheets.
In the third quarter of 2026, we completed the sale of certain Corporate fixed assets. The total proceeds received were $
9
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Goodwill and Identifiable Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill:
(In millions) |
|
Water |
|
|
Outdoors |
|
|
Security |
|
|
Total |
|
||||
Goodwill at December 27, 2025(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Year-to-date foreign currency translation adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Goodwill at September 26, 2026(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(a)
We test goodwill for impairment annually during the fourth quarter, or whenever events or circumstances may indicate that the carrying value of a reporting unit may be greater than its fair value. The Company has three reporting units, Water, Outdoors, and Security, which are determined in accordance with the provisions of ASC 350, Intangibles - Goodwill and Other.
First Quarter 2026 Impairment Test
The historical cushion on the Outdoors reporting unit and the recent and sustained decline in the Company's stock price since the prior impairment test conducted in the fourth quarter of 2025 triggered the Company to perform an interim goodwill impairment test at the Outdoors reporting unit as of March 28, 2026. The fair value of the reporting unit was determined based on an equally weighted combination of a discounted cashflow analysis, or income approach, and a guideline public company method, or market approach, based on market multiples of comparable companies. The most significant assumptions used in the fair value analysis were forecasted revenue growth rates, EBITDA margin, market participant discount rates, and EBITDA multiples. As a result of this test, we determined that no impairment existed for the Outdoors reporting unit and that fair value substantially exceeded the carrying value.
Second Quarter 2026 Impairment Test
The strategic review of the Fiberon business within the Outdoors segment triggered the Company to perform an interim goodwill impairment test of the Outdoors reporting unit as of June 27, 2026. The fair value of the reporting unit was determined based on an equally weighted combination of a discounted cashflow analysis, or income approach, and a guideline public company method, or market approach, based on market multiples of comparable companies. The most significant assumptions used in the fair value analysis were forecasted revenue growth rates, EBITDA margin, market participant discount rates, and EBITDA multiples. As a result of this test, we determined that no impairment existed for the Outdoors reporting unit and that fair value substantially exceeded the carrying value.
The following table summarizes intangible assets:
(In millions) |
|
As of September 26, 2026 |
|
|
As of December 27, 2025 |
|
||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Indefinite-lived tradenames |
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||||
Amortizable intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tradenames |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Customer and contractual relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Patents/proprietary technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The $
Amortizable identifiable intangible assets, primarily customer relationships, are amortized over their estimated useful life, ranging from
10
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. External Debt and Financing Arrangements
Senior Notes
At September 26, 2026, the Company had aggregate outstanding senior notes in the principal amount of $
|
|
|
|
|
|
|
|
Net Carrying Value |
|
||||||
(in millions) |
Principal Amount |
|
|
Issuance Date |
|
Maturity Date |
|
September 26, 2026 |
|
|
December 27, 2025 |
|
|||
3.250% Senior Notes |
$ |
|
|
|
|
|
|
|
|
|
|||||
4.000% Senior Notes |
$ |
|
|
|
|
|
|
|
|
|
|||||
4.500% Senior Notes |
$ |
|
|
|
|
|
|
|
|
|
|||||
5.875% Senior Notes |
$ |
|
|
|
|
|
|
|
|
|
|||||
Total Senior Notes long-term |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
Credit Facilities
In January 2026, the Company entered into a fourth amended and restated $
We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $
Commercial Paper
The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes. The Company’s Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program. Because the Company has the ability to refinance these borrowings on a long-term basis through the Revolving Credit Agreement, borrowings under the Commercial Paper Program are classified as Long-term debt in the Condensed Consolidated Balance Sheets. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the Revolving Credit Agreement, not to exceed $
11
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Financial Instruments
We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company.
Raw materials used by the Company are subject to price volatility caused by unpredictable external factors such as supply conditions, geopolitical and economic variables, and weather. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations. We account for these commodity derivatives as economic hedges or cash flow hedges. Changes in the fair value of economic hedges are immediately recognized in current period earnings. Changes in the fair value of cash flow hedges are recorded in other comprehensive income. Amounts deferred in other comprehensive income are reclassified into cost of products sold in the period during which the hedged forecasted purchases affect earnings. The gross notional amount of all commodity derivatives outstanding at September 26, 2026 was $
We may be exposed to interest rate risk on existing debt or forecasted debt issuance. To mitigate this risk, we may enter into interest rate hedge contracts. There were
We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed
We have entered into cross-currency swap contracts to hedge both our Canadian dollar and Euro exposures of the Company's net investments in certain foreign subsidiaries. As of September 26, 2026, the notional value of the cross-currency swap contracts was $
For derivative instruments that are designated as fair value hedges, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the Condensed Consolidated Statements of Comprehensive Income. The changes in the fair value of cash flow hedges are reported in Accumulated other comprehensive income and are recognized in the Condensed Consolidated Statements of Comprehensive Income when the hedged item affects earnings.
The fair values of derivative instruments on the Condensed Consolidated Balance Sheets as of September 26, 2026 and December 27, 2025 were as follows:
|
|
|
|
Fair Value |
|
|||||
(In millions) |
|
Location |
|
September 26, 2026 |
|
|
December 27, 2025 |
|
||
Assets: |
|
|
|
|
|
|
|
|
||
Foreign exchange contracts |
|
Other current assets |
|
$ |
|
|
$ |
|
||
Net investment hedges |
|
Other current assets |
|
|
|
|
|
|
||
|
|
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
||
Foreign exchange contracts |
|
Other current liabilities |
|
$ |
|
|
$ |
|
||
Net investment hedges |
|
Other current liabilities |
|
|
|
|
|
|
||
Net investment hedges |
|
Other non-current liabilities |
|
|
|
|
|
|
||
|
|
Total liabilities |
|
$ |
|
|
$ |
|
||
12
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The effects of derivative financial instruments on the statements of comprehensive income for the thirty-nine weeks ended September 26, 2026 and September 27, 2025 were as follows:
(In millions) |
|
Classification and Amount of Gain (Loss) |
|
|||||||||
|
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|||||||||
|
|
Cost of |
|
|
Interest |
|
|
Other income, net |
|
|||
Total amounts per Consolidated Statements of Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Gain (loss) on fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Hedged items |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Derivative designated as hedging instruments |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Gain on net investment hedging relationships |
|
|
- |
|
|
|
- |
|
|
|
|
|
Gain (loss) on cash flow hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
|
|
|
- |
|
|
|
- |
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|||
(In millions) |
|
Classification and Amount of Gain (Loss) |
|
|||||||||
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|||||||||
|
|
Cost of |
|
|
Interest |
|
|
Other income, net |
|
|||
Total amounts per Consolidated Statements of Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Gain (loss) on fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Hedged items |
|
|
- |
|
|
|
- |
|
|
|
|
|
Derivative designated as hedging instruments |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Gain on net investment hedging relationships |
|
|
- |
|
|
|
- |
|
|
|
|
|
Gain (loss) on cash flow hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
|
|
|
- |
|
|
|
- |
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
|
|
|
- |
|
|
13
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The effects of derivative financial instruments on the statements of comprehensive income for the thirteen weeks ended September 26, 2026 and September 27, 2025 were as follows:
(In millions) |
|
Classification and Amount of Gain (Loss) |
|
|||||||||
|
|
Thirteen Weeks Ended September 26, 2026 |
|
|||||||||
|
|
Cost of |
|
|
Interest |
|
|
Other income, net |
|
|||
Total amounts per Consolidated Statements of Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Gain (loss) on fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Hedged items |
|
|
- |
|
|
|
- |
|
|
|
|
|
Derivative designated as hedging instruments |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Gain on net investment hedging relationships |
|
|
- |
|
|
|
- |
|
|
|
|
|
Gain (loss) on cash flow hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
|
|
|
- |
|
|
|
- |
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|||
(In millions) |
|
Classification and Amount of Gain (Loss) |
|
|||||||||
|
|
Thirteen Weeks Ended September 27, 2025 |
|
|||||||||
|
|
Cost of |
|
|
Interest |
|
|
Other expense, net |
|
|||
Total amounts per Consolidated Statements of Comprehensive Income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Gain (loss) on fair value hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Hedged items |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Derivative designated as hedging instruments |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Gain on net investment hedging relationships |
|
|
- |
|
|
|
- |
|
|
|
|
|
Gain (loss) on cash flow hedging relationships |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
|
|
|
- |
|
|
|
- |
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|||
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income |
|
|
- |
|
|
|
|
|
|
- |
|
|
14
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Fair Value Measurements
The fair value hierarchy consists of the following three levels:
• Level 1 - valuations are quoted prices in active markets for identical assets or liabilities
• Level 2 - valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market
• Level 3 - valuations using unobservable inputs, due to little or no market activity for the asset or liability, such as internally-developed valuation models
The carrying value and fair value of debt as of September 26, 2026 and December 27, 2025 were as follows:
(In millions) |
|
September 26, 2026 |
|
|
December 27, 2025 |
|
||||||||||
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
Notes, net of underwriting commissions, price discounts and debt issuance costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial paper borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The estimated fair value of our Notes is determined by using quoted market prices of our debt securities, which are Level 1 inputs. The estimated fair value of borrowings under our Commercial Paper Program is determined primarily using broker quotes, which are Level 2 inputs, and are equal to their carrying value.
Assets and liabilities measured at fair value on a recurring basis as of September 26, 2026 and December 27, 2025 were as follows:
(In millions) |
|
Fair Value |
|
|||||
|
|
September 26, 2026 |
|
|
December 27, 2025 |
|
||
Assets |
|
|
|
|
|
|
||
Derivative financial instruments (Level 2) |
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
||
Derivative financial instruments (Level 2) |
|
$ |
|
|
$ |
|
||
15
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Accumulated Other Comprehensive Income (Loss)
The after-tax components of and changes in Accumulated other comprehensive (loss) income for the thirty-nine and thirteen weeks ended September 26, 2026 and September 27, 2025 were as follows:
(In millions) |
|
Foreign |
|
|
Derivative |
|
|
Defined |
|
|
Accumulated |
|
||||
Balance at December 28, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Amounts classified into accumulated other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from accumulated other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive (loss) income |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Balance at September 27, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at December 27, 2025 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Amounts classified into accumulated other |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amounts reclassified from accumulated other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 26, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
(In millions) |
|
Foreign |
|
|
Derivative |
|
|
Defined |
|
|
Accumulated |
|
||||
Balance at June 28, 2025 |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Amounts classified into accumulated other |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Amounts reclassified from accumulated other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at September 27, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at June 27, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Amounts classified into accumulated other |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Amounts reclassified from accumulated other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current-period other comprehensive (loss) income |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at September 26, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
16
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The reclassifications out of Accumulated other comprehensive loss for the thirty-nine and thirteen weeks ended September 26, 2026 and September 27, 2025 were as follows:
(In millions) |
||||||||||
Details about Accumulated Other |
|
Amount Reclassified from |
|
|
Affected Line Item in |
|||||
|
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|
|
||
Gains (losses) on cash flow hedges |
|
|
|
|
|
|
|
|
||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
Cost of products sold |
||
Interest rate contracts |
|
|
|
|
|
|
|
Interest expense |
||
Total before tax |
|
|
|
|
|
|
|
|
||
Tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
Total reclassifications for the period, net of tax |
|
$ |
|
|
$ |
|
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
(In millions) |
||||||||||
Details about Accumulated Other |
|
Amount Reclassified from |
|
|
Affected Line Item in |
|||||
|
|
Thirteen Weeks Ended September 26, 2026 |
|
|
Thirteen Weeks Ended September 27, 2025 |
|
|
|
||
Gains (losses) on cash flow hedges |
|
|
|
|
|
|
|
|
||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
Cost of products sold |
||
Interest rate contracts |
|
|
|
|
|
|
|
Interest expense |
||
Total before tax |
|
|
|
|
|
|
|
|
||
Tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
Total reclassifications for the period, net of tax |
|
$ |
|
|
$ |
|
|
|
||
|
|
|
|
|
|
|
|
|
||
17
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Revenue
The following table disaggregates our consolidated revenue by major sales distribution channels for the thirty-nine and thirteen weeks ended September 26, 2026 and September 27, 2025:
(In millions) |
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|
Thirteen Weeks Ended September 26, 2026 |
|
|
Thirteen Weeks Ended September 27, 2025 |
|
||||
Wholesalers(a) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Home Center retailers(b) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other retailers(c) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International(d) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As part of our contracts with customers, we recognize contract liabilities, principally deferred revenue. Deferred revenue liabilities represent advanced payments and billings in excess of revenue recognized. Deferred revenue liabilities of $
11. Defined Benefit Plans
The components of net periodic benefit cost for pension benefits for the thirty-nine and thirteen weeks ended September 26, 2026 and September 27, 2025 were as follows:
|
Pension Benefits |
|
|||||||||||||
(In millions) |
Thirty-Nine Weeks Ended September 26, 2026 |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|
Thirteen Weeks Ended September 26, 2026 |
|
|
Thirteen Weeks Ended September 27, 2025 |
|
||||
Interest cost |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected return on plan assets |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net periodic benefit cost |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12. Income Taxes
The effective income tax rates for the thirty-nine and thirteen weeks ended September 26, 2026 were (
The difference between the Company's effective income tax rate for the thirty-nine and thirteen weeks ended September 26, 2026 and the U.S. statutory income tax rate of
18
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Product Warranties
We generally record warranty expense related to contractual warranty terms at the time of sale. We may also provide customer concessions for claims made outside of the contractual warranty terms and those expenses are recorded in the period in which the concession is made. We offer our customers various warranty terms based on the type of product that is sold. Warranty expense is determined based on historic claim experience and the nature of the product category.
(In millions) |
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
||
Reserve balance at beginning of period |
|
$ |
|
|
$ |
|
||
Provision for warranties issued |
|
|
|
|
|
|
||
Settlements made (in cash or in kind) |
|
|
( |
) |
|
|
( |
) |
Foreign translation adjustments |
|
|
|
|
|
( |
) |
|
Reserve balance at end of period |
|
$ |
|
|
$ |
|
||
14. Information on Business Segments
The Company’s operations are structured into
The chief operating decision maker (“CODM”), our Chief Executive Officer during the third quarter of 2026, uses operating income to evaluate the performance of our segments and to make resource allocation decisions. Segment operating income excludes unallocated corporate costs.
The significant expense categories and amounts shown below align with the segment level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts below. Other operating expenses principally consist of cost of products sold and selling, general and administrative expenses, which are not provided to the CODM in managing performance of the operating segments.
The Water segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals, predominantly under the Moen, ROHL, Riobel, Victoria+Albert, Perrin & Rowe, Aqualisa, Shaws, Emtek, Schaub and SpringWell brands. The Outdoors segment includes fiberglass and steel entry door systems under the Therma-Tru brand name, storm, screen and security doors under the Larson brand name, composite decking and railing under the Fiberon brand name, urethane millwork under the Fypon brand name and wide-opening exterior door systems and outdoor enclosures under the Solar Innovations brand. The Security segment includes locks, safety and security devices, connected and mechanical lock out tag out solutions and electronic security products under the Master Lock, American Lock, Yale and August brands, and fire-resistant safes, security containers and commercial cabinets under the SentrySafe brand. Corporate expenses consist primarily of headquarters administrative expenses.
19
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net sales and operating income for the thirty-nine weeks ended September 26, 2026 and September 27, 2025 by segment were as follows:
(In millions) |
|
Water |
|
|
Outdoors |
|
|
Security |
|
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unallocated expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
(a)
(In millions) |
|
Water |
|
|
Outdoors |
|
|
Security |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unallocated expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
(a)
20
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Net sales and operating income for the thirteen weeks ended September 26, 2026 and September 27, 2025 by segment were as follows:
(In millions) |
|
Water |
|
|
Outdoors |
|
|
Security |
|
|
Thirteen Weeks Ended September 26, 2026 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unallocated expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
(a)
(In millions) |
|
Water |
|
|
Outdoors |
|
|
Security |
|
|
Thirteen Weeks Ended September 27, 2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income (loss) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unallocated expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating income |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (income) expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total income before income taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
(a)
21
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Restructuring and Other Charges
On January 18, 2025, we announced the decision to consolidate U.S. regional offices into one campus headquarters in Deerfield, Illinois. In connection with these consolidation activities and related organizational and personnel changes, the Company currently expects to continue to incur certain cash and non-cash restructuring and other charges related to employee relocation, severance, retention, non-cash asset related costs, lease exit costs, and other transition activities estimated in the range of approximately $
On September 25, 2026, the Board of Directors approved a plan to exit its commercial business within the Water segment serving domestic markets primarily in China, as well as other jurisdictions in Asia. During the thirteen weeks and thirty-nine weeks ended September 26, 2026, the Company recognized $
Restructuring and other charges (gains) in the thirty-nine weeks ended September 26, 2026 were primarily attributable to costs related to organizational and personnel changes, the decision to exit its commercial business in Asia, and the decision to consolidate our U.S. regional offices into one campus headquarters.
Restructuring and other charges in the thirty-nine weeks ended September 27, 2025 were primarily attributable to costs associated with the decision to consolidate the Company's U.S. regional offices into one campus headquarters and its related organizational and personnel changes, a product-line rationalization within our Outdoors segment, and plant closures in all our segments.
Total restructuring and other charges (gains) for the thirty-nine weeks ended September 26, 2026 and September 27, 2025 are shown below.
(In millions) |
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|||||||||||||
|
|
|
|
|
Other Charges (Gains) (a) |
|
|
|
|
|||||||
|
|
Restructuring |
|
|
Cost of Products Sold |
|
|
SG&A (b) |
|
|
Total |
|
||||
Water |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outdoors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Security |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(In millions) |
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|||||||||||||
|
|
|
|
|
Other Charges (Gains) (a) |
|
|
|
|
|||||||
|
|
Restructuring |
|
|
Cost of Products Sold |
|
|
SG&A (b) |
|
|
Total |
|
||||
Water |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outdoors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Security |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
22
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Total restructuring and other charges (gains) for the thirteen weeks ended September 26, 2026 and September 27, 2025 are shown below.
(In millions) |
|
Thirteen Weeks Ended September 26, 2026 |
|
|||||||||||||
|
|
|
|
|
Other Charges (Gains) (a) |
|
|
|
|
|||||||
|
|
Restructuring |
|
|
Cost of Products Sold |
|
|
SG&A (b) |
|
|
Total |
|
||||
Water |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outdoors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Security |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(In millions) |
|
Thirteen Weeks Ended September 27, 2025 |
|
|||||||||||||
|
|
|
|
|
Other Charges (Gains) (a) |
|
|
|
|
|||||||
|
|
Restructuring |
|
|
Cost of Products Sold |
|
|
SG&A (b) |
|
|
Total |
|
||||
Water |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outdoors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Security |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restructuring and other charges (gains) in the thirteen weeks ended September 26, 2026 were primarily attributable to costs related to organizational and personnel changes, the decision to exit a commercial business within the Water segment in Asia, and the decision to consolidate our U.S. regional offices into one campus headquarters. Restructuring and other charges (gains) in the thirteen weeks ended September 27, 2025 were primarily due to costs incurred in connection with the Company's headquarters consolidation and its related organizational changes and plant and distribution center closures across all our segments.
Reconciliation of Restructuring Liability
(In millions) |
|
Balance at |
|
|
2026 |
|
|
Cash |
|
|
Non-Cash |
|
|
Balance at |
|
|||||
Workforce reduction costs |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
(In millions) |
|
Balance at |
|
|
2025 |
|
|
Cash |
|
|
Non-Cash |
|
|
Balance at |
|
|||||
Workforce reduction costs |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Other |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
23
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Earnings Per Share
The computations of earnings per common share for the thirty-nine and thirteen weeks ended September 26, 2026 and September 27, 2025 were as follows:
(In millions, except per share data) |
|
Thirty-Nine Weeks Ended September 26, 2026 |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
|
Thirteen Weeks Ended September 26, 2026 |
|
|
Thirteen Weeks Ended September 27, 2025 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
17. Commitments and Contingencies
Litigation
The Company is a party to lawsuits that are ordinary, routine litigation matters incidental to its businesses. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.
Environmental
We are involved in remediation activities to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs of each site are based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop estimates of environmental remediation exposures. Some of the potential liabilities relate to sites we own, and some relate to sites we no longer own or never owned. Several of our subsidiaries have been designated as potentially responsible parties (“PRP”) under Superfund or similar state laws. In most instances where our subsidiaries are named as a PRP, we enter into cost-sharing arrangements with other PRPs. We give notice to insurance carriers of potential PRP liability, but very rarely, if ever, receive reimbursement from insurance for PRP costs. We believe compliance with current environmental protection laws (before taking into account estimated recoveries from third parties) will not have a material adverse effect upon our results of operations, cash flows or financial condition.
IEEPA Tariff Refunds
The Company has paid customs duties on certain imported products subject to U.S. trade actions and has filed claims seeking refunds of a portion of these duties based on ongoing legal proceedings and related administrative actions. During the thirty-nine weeks ended September 26, 2026, management determined that recoveries of IEEPA tariff refund claims of $
24
FORTUNE BRANDS INNOVATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other
On September 12, 2025, the Company experienced a fire within a portion of one of its manufacturing facilities within the Outdoors segment. The fire primarily caused damage to owned property and equipment. In 2025, expenses of $
18. Subsequent Events
Dividend Declared
On September 29, 2026, the Company's Board declared a cash dividend of $
Fiberon Sale
On October 15, 2026, the Company entered into a definitive agreement to sell its Fiberon composite decking business to a subsidiary of Inteplast Group Corporation for $
25
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto, which are included in this report, as well as our audited consolidated financial statements for the year ended December 27, 2025, which are included in our Annual Report on Form 10-K for the year ended December 27, 2025.
This discussion contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected effects of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the spin-off of MasterBrand, Inc. and the tax-free nature of the spin-off transaction, the anticipated effects of recently issued accounting standards on our financial statements, the anticipated impact of future tariffs and tariff refunds and other matters that are not historical in nature. Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “outlook,” “positioned”, “confident,” “opportunity”, “focus” 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, plans, estimates, assumptions and projections of our management about our industry, business and future financial results available at the time this report is filed with the SEC. 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, (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, as well as those described in the section of our Annual Report on Form 10-K for the year ended December 27, 2025 entitled Item 1A. “Risk Factors”. We undertake no obligation to, and expressly disclaim any such obligation to, update, amend, clarify or revise 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.
26
OVERVIEW
References to “Fortune Brands,” “the Company,” “we,” “our” and “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires. The Company is a leading home, security and digital products company whose purpose is to elevate every life by transforming spaces into havens. We sell our products through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself” remodeling-oriented home centers, showrooms, direct to consumer, e-commerce and other retail outlets.
We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains, a strong capital structure, as well as a tradition of strong innovation and customer service. We are focused on outperforming our markets in growth, profitability and returns in order to drive increased stockholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of the categories we serve and our leading brands. We believe the long-term outlook for our products remains favorable, and our strategic advantages, including the set of capabilities we refer to as the Fortune Brands Advantage, will help us to achieve profitable organic growth over time.
We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions, non-controlling equity investments, and joint ventures, and return cash to stockholders through a combination of dividends and repurchases of shares of our common stock under our share repurchase program as explained in further detail under “Liquidity and Capital Resources” below.
The U.S. market for our products primarily consists of spending on both new home construction and repair and remodel activities within existing homes, with a substantial majority of the markets we serve consisting of repair and remodel spending. Growth in the U.S. market for our home products will largely depend on consumer confidence, employment, wage growth, home prices, equity levels and rates of extraction, stable mortgage rates and credit availability. Increases in inflation and mortgage rates during the preceding years have slowed the pace of single-family and existing home sales activity and new home construction and repair and remodel activities. However, we believe we are well positioned to manage the continued slow-down in the housing market as we believe the fundamental drivers of the housing market remain intact.
We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile geopolitical environment, as well as increased rates of inflation, increased interest rates and unfavorable fluctuations in foreign exchange rates. In addition, we have been adversely impacted and may in the future be impacted by tariff-related costs.
On February 20, 2026, the U.S. Supreme Court ruled that the U.S. tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S. were unauthorized. In March 2026, the Court of International Trade (“CIT”) issued refund orders and the administrative system the government created to process refunds began accepting refund claims on April 20, 2026. During the thirty-nine weeks ended September 26, 2026, management determined that recoveries of IEEPA tariff refund claims of $146.6 million were probable and estimable and recorded a reduction to Cost of products sold in the Condensed Consolidated Statements of Comprehensive Income of $145.5 million, less $11.5 million of tariff refunds no longer deemed probable of recovery. In addition, $1.1 million remains as a reduction in Inventory on the Condensed Consolidated Balance Sheet as of September 26, 2026. As of September 26, 2026, the Company had received $121.5 million of the submitted refund claims and $4.3 million of interest income related to those claims and had a refund receivable of $13.6 million in the Condensed Consolidated Balance Sheet. The Company does not anticipate any additional IEEPA tariff refund recoveries other than the recoveries that have been recorded through the end of the third quarter of 2026.
The Company continues to actively work to mitigate the anticipated impacts of tariffs through a combination of supply chain actions, cost-out activities and strategic pricing actions across all of our channels and brands. However, this remains a rapidly evolving landscape, and the Company's ability to mitigate the anticipated impacts of tariffs could be affected by a number of factors, including additional tariffs or trade-related sanctions imposed by the U.S. or other countries, and if the Company is ultimately not able to substantially mitigate the impacts of tariffs, there would be negative impacts to the Company's results of operations. We are also unable, at this time, to determine any future negative impacts from reduced consumer spending as a result of inflationary or other macroeconomic pressures or uncertainty that may result from the imposition of current or future tariffs.
On September 25, 2026, the Board of Directors approved a plan to rationalize the EMEA operating footprint of a business within the Water segment, which resulted in asset impairment charges of $24.3 million. In addition, as of September 26, 2026, the Company recognized asset impairment charges of $45.2 million related to a second asset group within the Water segment, driven by lower expected future cash flows related to the use of such asset group’s facility. See Note 3 for additional information.
On September 25, 2026, the Board approved a plan to exit its commercial business within the Water segment serving domestic markets primarily in China, as well as other jurisdictions in Asia. The transition is expected to be substantially complete by the third quarter of 2027. For the thirteen weeks and thirty-nine weeks ended September 26, 2026, we incurred total charges of $10.3 million
27
related to employee severance, which are included in Restructuring charges in the Condensed Consolidated Statements of Comprehensive Income. The Company also recognized $7.2 million of exit-related costs recorded within Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income. The Company expects to incur additional charges, primarily related to employee severance and retention, lease exit costs, accelerated depreciation and other exit costs, as the exit activities progress through the third quarter of 2027. These remaining charges are not expected to be material to the Company's consolidated financial statements.
On October 15, 2026, the Company announced it has executed a definitive agreement to sell its Fiberon business to a subsidiary of Inteplast Group Corporation for $160 million in cash, subject to the terms and conditions of the definitive agreement. The closing of the transaction is subject to regulatory approval and is expected to occur in the fourth quarter of 2026. As a result of entering into the agreement, the Company determined that Fiberon met the criteria to be classified as held-for-sale. During the thirty-nine weeks ended September 26, 2026, the Company recognized asset impairment charges of $233.0 million with respect to the Fiberon asset group. Management expects to record a loss on the sale of approximately $175 million to $205 million related to the Fiberon business in the fourth quarter of 2026, subject to the finalization of closing costs and working capital adjustments.
28
RESULTS OF OPERATIONS
Thirty-Nine Weeks Ended September 26, 2026 Compared To Thirty-Nine Weeks Ended September 27, 2025
Fortune Brands delivered net income of $51.6 million, or $0.43 per diluted common share for the thirty-nine weeks ended September 26, 2026 compared to net income of $222.4 million, or $1.83 per diluted common share in the prior year. Net income for the thirty-nine weeks ended September 26, 2026 was negatively impacted by asset impairment charges of $303.1 million and lower sales unit volume, partially offset by tariff refunds of $146.6 million. We delivered cash provided by operating activities of $430.6 million for the thirty-nine weeks ended September 26, 2026, compared to $270.4 million in the same prior year period.
|
|
Net Sales |
|||||||||||
(In millions) |
|
2026 |
|
|
2025 |
|
|
% Change |
|||||
Water |
|
$ |
1,753.1 |
|
|
$ |
1,830.8 |
|
|
|
(4.2 |
) |
% |
Outdoors |
|
|
1,006.4 |
|
|
|
1,028.1 |
|
|
|
(2.1 |
) |
|
Security |
|
|
519.4 |
|
|
|
526.8 |
|
|
|
(1.4 |
) |
|
Net sales |
|
$ |
3,278.9 |
|
|
$ |
3,385.7 |
|
|
|
(3.2 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Operating Income (Loss) |
|||||||||||
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
|||
Water |
|
$ |
292.0 |
|
|
$ |
405.1 |
|
|
|
(27.9 |
) |
% |
Outdoors |
|
|
(107.7 |
) |
|
|
59.7 |
|
|
|
(280.4 |
) |
|
Security |
|
|
109.1 |
|
|
|
66.4 |
|
|
|
64.3 |
|
|
Less: Corporate expenses |
|
|
(181.7 |
) |
|
|
(136.8 |
) |
|
|
32.8 |
|
|
Operating income |
|
$ |
111.7 |
|
|
$ |
394.4 |
|
|
|
(71.7 |
) |
% |
The following discussion of consolidated results of operations and segment results refers to the thirty-nine weeks ended September 26, 2026 compared to the thirty-nine weeks ended September 27, 2025. Consolidated results of operations should be read in conjunction with segment results of operations.
Net sales
Net sales decreased by $106.8 million, or 3.2%, primarily due to lower sales volume across all operating segments, primarily driven by market softness, service level challenges and discrete share losses in certain product categories. Volume declines were partially offset by year over year price increases, including those intended to mitigate cost increases, and by the favorable impact of foreign exchange of $17.2 million.
Cost of products sold
Cost of products sold decreased by $122.0 million, or 6.5%, primarily due to the recognition of IEEPA tariff refunds of $145.5 million in the current year and lower sales volumes, partially offset by higher landed product cost due to direct material cost inflation.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by $68.9 million, or 7.1%, primarily due to costs associated with governance advisory services and leadership changes of $44.2 million and increased variable incentive compensation costs of $40.6 million, partially offset by lower restructuring-related charges of $15.7 million.
Asset impairment charges
Asset impairment charges increased by $253.0 million primarily due to the impairment of property, plant and equipment, net, customer and contractual relationships, and tradenames during the thirty-nine weeks ended September 26, 2026 within our Water and Outdoors segments of $70.1 million and $233.0 million, respectively, compared to the impairment of property, plant and equipment, net within our Outdoors segment of $50.1 million during the thirty-nine weeks ended September 27, 2025.
29
Restructuring charges
Restructuring charges of $28.9 million were primarily attributable to costs related to organizational and personnel changes, the decision to exit our Moen commercial business in Asia, and the decision to consolidate our U.S. regional offices into one campus headquarters.
Interest expense
Interest expense decreased by $10.1 million, or 11.4%, to $78.3 million primarily due to average lower commercial paper borrowings net of repayments and lower interest rates on commercial paper during the thirty-nine weeks ended September 26, 2026, as compared to the thirty-nine weeks ended September 27, 2025.
Other (income) expense, net
Other (income) expense, net, was $(3.9) million in the thirty-nine weeks ended September 26, 2026, compared to $(5.8) million in the thirty-nine weeks ended September 27, 2025. The decrease in other income, net was primarily due to increases in foreign currency transaction expense of $3.9 million, partially offset by an increase in interest income related to IEEPA tariff refund payments of $4.3 million.
Income taxes
The effective income tax rates for the thirty-nine weeks ended September 26, 2026 and thirty-nine weeks ended September 27, 2025 were (38.3%) and 28.7%, respectively.
The difference between the Company's effective income tax rate for the thirty-nine weeks ended September 26, 2026 and the U.S. statutory income tax rate of 21% primarily relates to tax benefits from an internal legal entity restructuring, decreases in uncertain tax positions and the effects of cross-border tax laws, partially offset by state income taxes, foreign interest deductibility, certain foreign losses for which no tax benefit was recognized and changes in plans regarding the future distribution of certain foreign earnings.
The difference between the Company’s effective income tax rate for the thirty-nine weeks ended September 27, 2025, and the U.S. statutory income tax rate of 21% primarily relates to state income taxes, including the state income tax impacts of legal entity restructuring, foreign income taxed at higher rates, and dividend withholding tax, partially offset by decreases in uncertain tax positions.
Results By Segment
Water
Net sales decreased by $77.7 million, or 4.2%, primarily due to lower sales unit volume from the carryover of discrete share losses from the first half of 2025, service level challenges, softer customer demand in retail and slow down in wholesale new construction demand. Volume declines were partially offset by price actions, growth in the eCommerce channel, and the favorable impact of foreign exchange of $14.5 million.
Operating income decreased by $113.1 million, or 27.9%, primarily due to asset impairment charges of $70.1 million, as well as the impact of lower net sales, higher landed product cost, and higher costs to serve our customers, partially offset by tariff refunds recognized of $97.3 million.
Outdoors
Net sales decreased by $21.7 million, or 2.1%, primarily due to lower sales unit volume from softer new construction related demand in the wholesale channel, partially offset by price actions and favorable year-over-year channel inventory levels.
Operating income decreased by $167.4 million, or 280.4%, primarily due to higher asset impairment charges of $182.9 million, lower net sales, higher material costs, primarily aluminum, and higher freight costs, partially offset by lower restructuring and restructuring-related charges of $17.4 million, and tariff refunds recognized of $10.8 million.
30
Security
Net sales decreased by $7.4 million, or 1.4%, primarily due to declines in retail and eCommerce, partially offset by growth in commercial, pricing actions to mitigate cost inflation and the favorable impact of foreign exchange of $2.8 million.
Operating income increased by $42.7 million, or 64.3%, primarily due to tariff refunds recognized of $37.4 million and lower restructuring and restructuring-related charges of $15.5 million, partially offset by $10.2 million of an inventory adjustment associated with SKU rationalization, higher costs to serve customers and lower net sales.
Corporate
Corporate expenses increased by $44.9 million, or 32.8%, primarily due to costs associated with governance advisory services and leadership changes of $44.2 million, and increased compensation costs of $26.3 million, partially offset by lower restructuring and restructuring-related charges of $15.9 million.
Thirteen Weeks Ended September 26, 2026 Compared To Thirteen Weeks Ended September 27, 2025
|
|
Net Sales |
|||||||||||
(In millions) |
|
2026 |
|
|
2025 |
|
|
% Change |
|||||
Water |
|
$ |
584.5 |
|
|
$ |
618.5 |
|
|
|
(5.5 |
) |
% |
Outdoors |
|
|
347.4 |
|
|
|
344.5 |
|
|
|
0.8 |
|
|
Security |
|
|
181.8 |
|
|
|
186.2 |
|
|
|
(2.4 |
) |
|
Net sales |
|
$ |
1,113.7 |
|
|
$ |
1,149.2 |
|
|
|
(3.1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Operating Income (Loss) |
|||||||||||
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
|||
Water |
|
$ |
13.3 |
|
|
$ |
145.9 |
|
|
|
(90.9 |
) |
% |
Outdoors |
|
|
52.3 |
|
|
|
(5.0 |
) |
|
NM |
|
|
|
Security |
|
|
38.4 |
|
|
|
27.7 |
|
|
|
38.6 |
|
|
Less: Corporate expenses |
|
|
(43.6 |
) |
|
|
(42.7 |
) |
|
|
2.1 |
|
|
Operating income |
|
$ |
60.4 |
|
|
$ |
125.9 |
|
|
|
(52.0 |
) |
% |
The following discussion of consolidated results of operations and segment results refers to the thirteen weeks ended September 26, 2026 compared to the thirteen weeks ended September 27, 2025. Consolidated results of operations should be read in conjunction with segment results of operations.
Net sales
Net sales decreased by $35.5 million, or 3.1%, primarily due to lower sales at our Water and Security segments. The decline was partially offset by year over year price increases, including those intended to mitigate cost increases, higher sales in the Outdoors segment, and a favorable foreign exchange impact of $2.0 million.
Cost of products sold
Cost of products sold decreased by $22.1 million, or 3.5%, primarily due to recognition of net tariff refunds of $29.8 million in the current year and lower sales volume, partially offset by higher landed product cost.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by $26.3 million, or 8.4%, primarily due to increased variable incentive compensation costs of $23.1 million, partially offset by lower restructuring-related charges of $3.7 million.
Asset impairment charges
Asset impairment charges were $73.8 million for the thirteen weeks ended September 26, 2026 due to the impairment of property, plant and equipment, net, customer and contractual relationships, and tradenames within our Water and Outdoors segments of $69.5
31
million and $4.3 million, respectively, compared to the impairment of property, plant and equipment, net within our Outdoors segment of $50.1 million during the thirteen weeks ended September 27, 2025.
Restructuring charges
Restructuring charges of $16.4 million were primarily attributable to costs related to organizational and personnel changes, the decision to exit our commercial business within the Water segment in Asia, and the decision to consolidate our U.S. regional offices into one campus headquarters.
Interest expense
Interest expense decreased by $4.2 million, or 14.7%, primarily due to average lower commercial paper borrowings net of repayments during the thirteen weeks ended September 26, 2026 and lower interest rates on commercial paper, as compared to the thirteen weeks ended September 27, 2025.
Other (income) expense, net
Other (income) expense, net, was $(4.5) million in the thirteen weeks ended September 26, 2026, compared to $2.6 million in the thirteen weeks ended September 27, 2025. The increase in other income, net was primarily due to an increase in interest income related to IEEPA tariff refund payments of $4.3 million, and decreases in foreign currency transaction expense of $2.0 million.
Income taxes
The effective income tax rates for the thirteen weeks ended September 26, 2026 and thirteen weeks ended September 27, 2025 were (23.2%) and 25.3%, respectively.
The difference between the Company's effective income tax rate for the thirteen weeks ended September 26, 2026 and the U.S. statutory income tax rate of 21% primarily relates to tax benefits from an internal legal entity restructuring, decreases in uncertain tax positions and the effects of cross-border tax laws, partially offset by state income taxes, foreign interest deductibility, certain foreign losses for which no tax benefit was recognized and changes in plans regarding the future distribution of certain foreign earnings.
The difference between the Company’s effective income tax rate for the thirteen weeks ended September 27, 2025, and the U.S. statutory tax rate of 21% primarily relates to state income taxes and foreign income taxed at higher rates, partially offset by provision to return adjustments.
Results By Segment
Water
Net sales decreased by $34.0 million, or 5.5%, primarily due to lower sales unit volume from service level challenges, softer customer demand in retail and a slow down in wholesale new construction demand. Volume declines were partially offset by price actions and growth in the eCommerce channel and the favorable impact of foreign exchange of $2.5 million.
Operating income decreased by $132.6 million, or 90.9%, primarily due to asset impairment charges of $69.5 million, as well as the impact of lower sales, higher landed product cost, higher costs to serve our customers and higher restructuring and restructuring-related charges of $15.1 million, partially offset by net tariff refunds recognized of $12.0 million.
Outdoors
Net sales increased by $2.9 million, or 0.8%, primarily due to favorable year-over-year channel inventory levels and price actions, partially offset by lower sales unit volume from softer new construction demand in the wholesale channel.
Operating income increased by $57.3 million, or 1,146.0%, primarily due to lower asset impairment charges of $45.8 million, a favorable change of $7.7 million related to the September 2025 fire at one of our manufacturing facilities, reflecting a $4.7 million gain from an insurance settlement in the thirteen weeks ended September 26, 2026 compared to $3.0 million expense in the prior year, lower restructuring and restructuring-related charges of $3.9 million, and tariff refunds recognized of $2.9 million. The increase in operating income was partially offset by higher material costs, primarily aluminum, and higher freight costs.
Security
Net sales decreased by $4.4 million, or 2.4%, primarily due to declines in retail and eCommerce driven by service levels, partially offset by growth in commercial, increased penetration with multi-family customers in Yale and pricing actions.
32
Operating income increased by $10.7 million, or 38.6%, primarily due to tariff refunds recognized of $14.9 million, and lower restructuring and restructuring-related charges of $5.1 million, partially offset by $10.2 million of an inventory adjustment associated with SKU rationalization efforts, higher costs to serve customers and lower net sales.
Corporate
Corporate expenses increased by $0.9 million, or 2.1%, primarily due to increased compensation costs of $16.8 million, partially offset by lower restructuring and restructuring-related charges of $7.1 million, and lower professional fees and other discretionary costs.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash on hand, cash flows from operating activities, cash borrowed under our credit facility and cash from debt issuances in the capital markets. Our operating income is generated by our subsidiaries. We believe our operating cash flows, including funds available under the credit facility and access to capital markets, provide sufficient liquidity to support the Company’s working capital requirements, capital expenditures and service of indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate, both for the 12-month period following September 26, 2026, and in the long-term.
Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section of our Annual Report on Form 10-K for the year ended December 27, 2025 entitled “Item 1A. Risk Factors”. In addition, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, repurchase shares of our common stock under our share repurchase program or pay dividends, or what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities, or otherwise.
Long-Term Debt
As of September 26, 2026, the Company had aggregate outstanding notes in the principal amount of $2.2 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. In addition, we believe that we have the ability to obtain alternative sources of financing if required. The following table provides a summary of the Company’s outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of September 26, 2026 and December 27, 2025:
|
|
|
|
|
|
|
|
Net Carrying Value |
|
||||||
(in millions) |
Principal Amount |
|
|
Issuance Date |
|
Maturity Date |
|
September 26, 2026 |
|
|
December 27, 2025 |
|
|||
3.250% Senior Notes |
$ |
700.0 |
|
|
September 2019 |
|
September 2029 |
|
|
697.8 |
|
|
|
697.2 |
|
4.000% Senior Notes |
$ |
450.0 |
|
|
March 2022 |
|
March 2032 |
|
|
447.5 |
|
|
|
447.2 |
|
4.500% Senior Notes |
$ |
450.0 |
|
|
March 2022 |
|
March 2052 |
|
|
437.3 |
|
|
|
436.9 |
|
5.875% Senior Notes |
$ |
600.0 |
|
|
June 2023 |
|
June 2033 |
|
|
595.3 |
|
|
|
594.8 |
|
Total Senior Notes long-term |
|
|
|
|
|
|
|
$ |
2,177.9 |
|
|
$ |
2,176.1 |
|
|
Credit Facilities
In January 2026, the Company entered into a fourth amended and restated $1.25 billion revolving credit facility (the “Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. The maturity date of the facility is January 2031. Borrowings under the Revolving Credit Agreement will bear interest at variable rates equal to, at the Company’s election, the term Secured Overnight Financing Rate ("SOFR") plus an applicable term SOFR margin for an interest period selected by the Company. The applicable term SOFR rate margin will be determined based on the ratings of the Company’s senior unsecured long-term debt securities. The daily simple SOFR rate margins range from 0.80% to 1.30%. Under the Revolving Credit Agreement, the Company is required to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other one-time adjustments. In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0. There were no outstanding borrowings under this facility as of September 26, 2026 and December 27, 2025. As of September 26, 2026, we were in compliance with all covenants under this facility.
33
We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of September 26, 2026 and December 27, 2025. There were no outstanding balances as of September 26, 2026 and December 27, 2025.
Commercial Paper
The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes. The Company's Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program, and as such borrowings under the Commercial Paper Program are included in Long-term debt in the Condensed Consolidated Balance Sheets. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the Revolving Credit Agreement, not to exceed $1.25 billion. The Company expects to use any issuances under the Commercial Paper Program for general corporate purposes. Outstanding borrowings under the Commercial Paper Program as of September 26, 2026 and December 27, 2025 were $118.7 million and $368.8 million, respectively.
Cash and Seasonality
On September 26, 2026, we had non-restricted cash and cash equivalents of $230.9 million, of which $211.6 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.
Our operating cash flows are significantly impacted by the seasonality of our business. We typically generate most of our operating cash flow in the third and fourth fiscal quarters of each year.
We believe that our current cash position, cash flow generated from operations, amounts available under our revolving credit facility and access to the capital markets should be sufficient for our operating requirements and enable us to fund our capital expenditures, share repurchases, dividend payments, and required long-term debt payments.
Share Repurchases and Dividends
In the thirty-nine weeks ended September 26, 2026, we repurchased 1.9 million shares of our outstanding common stock under the Company’s share repurchase program for $85.2 million. As of September 26, 2026, the Company’s total remaining share repurchase authorization under its share repurchase program was approximately $742.1 million. The share repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.
In the thirty-nine weeks ended September 26, 2026, we paid dividends in the amount of $93.2 million to the Company’s stockholders. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.
On September 29, 2026, the Company's Board declared a cash dividend of $0.26 per common share payable on December 9, 2026 to stockholders of record at the close of business on November 20, 2026.
Acquisitions
We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase stockholder value.
34
Cash Flows
Below is a summary of cash flows for the thirty-nine weeks ended September 26, 2026 and September 27, 2025.
|
|
|
|
|
|
|
||
(In millions) |
|
Thirty-Nine Weeks Ended |
|
|
Thirty-Nine Weeks Ended September 27, 2025 |
|
||
Net cash provided by operating activities |
|
$ |
430.6 |
|
|
$ |
270.4 |
|
Net cash used in investing activities |
|
|
(36.4 |
) |
|
|
(84.4 |
) |
Net cash used in financing activities |
|
|
(427.3 |
) |
|
|
(352.6 |
) |
Effect of foreign exchange rate changes on cash |
|
|
(0.3 |
) |
|
|
8.6 |
|
Net decrease in cash and cash equivalents |
|
$ |
(33.4 |
) |
|
$ |
(158.0 |
) |
Net cash provided by operating activities was $430.6 million in the thirty-nine weeks ended September 26, 2026, compared to $270.4 million in the thirty-nine weeks ended September 27, 2025. The increase in cash provided of $160.2 million was primarily due to favorable changes in working capital, including inventories, accrued expenses and other liabilities, which contributed $83.9 million and $77.0 million, respectively. Net cash provided by operating activities in the thirty-nine weeks ended September 26, 2026 also included $121.5 million of IEEPA tariff refunds received.
Net cash used in investing activities was $36.4 million in the thirty-nine weeks ended September 26, 2026, compared to net cash used in investing activities of $84.4 million in the thirty-nine weeks ended September 27, 2025. The decrease in cash used of $48.0 million was primarily due to a decrease in capital expenditures, as well as proceeds generated from the disposition of assets.
Net cash used in financing activities was $427.3 million in the thirty-nine weeks ended September 26, 2026, compared to net cash used in financing activities of $352.6 million in the thirty-nine weeks ended September 27, 2025. The increase in cash used of $74.7 million was primarily due to lower net debt proceeds offset by lower treasury stock purchases.
Pension Plans
Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans that are funded by a portfolio of investments maintained within our benefit plan trust. As of December 27, 2025, the fair value of our total pension plan assets was $188.3 million, representing funding of approximately 95% of the accumulated qualified benefit obligation liability. During the thirty-nine weeks ended September 26, 2026, we made no pension contributions. For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.
Foreign Exchange
We have operations in various foreign countries, principally Canada, Mexico, the United Kingdom, China, South Africa, Vietnam and France. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes in the information provided in the section entitled “Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 27, 2025.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in the information provided in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 27, 2025.
Item 4. CONTROLS AND PROCEDURES.
The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief
35
Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.
(b) Changes in Internal Control Over Financial Reporting.
There have been no changes in our internal control over financial reporting that occurred during the thirteen weeks ended September 26, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
36
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company is a party to lawsuits that are ordinary, routine litigation matters incidental to its businesses. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.
We are involved in remediation activities to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs of each site are based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop estimates of environmental remediation exposures. Some of the potential liabilities relate to sites we own, and some relate to sites we no longer own or never owned. Several of our subsidiaries have been designated as potentially responsible parties (“PRP”) under Superfund or similar state laws. In most instances where our subsidiaries are named as a PRP, we enter into cost-sharing arrangements with other PRPs. We give notice to insurance carriers of potential PRP liability, but very rarely, if ever, receive reimbursement from insurance for PRP costs. We believe compliance with current environmental protection laws (before taking into account estimated recoveries from third parties) will not have a material adverse effect upon our results of operations, cash flows or financial condition.
Item 1A. RISK FACTORS.
There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 27, 2025.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) for the thirteen weeks ended September 26, 2026:
Issuer Purchases of Equity Securities
Thirteen Weeks Ended September 26, 2026 |
|
Total |
|
|
Average |
|
|
Total number of |
|
|
Maximum dollar |
|
||||
June 28 – July 25 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
782,075,098 |
|
July 26 – August 22 |
|
|
369,813 |
|
|
|
45.97 |
|
|
|
369,813 |
|
|
|
765,075,607 |
|
August 23 – September 26 |
|
|
552,284 |
|
|
|
41.65 |
|
|
|
552,284 |
|
|
|
742,075,122 |
|
Total |
|
|
922,097 |
|
|
$ |
43.38 |
|
|
|
922,097 |
|
|
$ |
742,075,122 |
|
Authorization date |
|
Announcement date |
|
Authorization amount |
|
Expiration date |
February 4, 2025 |
|
February 6, 2025 |
|
$1,000,000,000 |
|
February 4, 2027 |
37
Item 5. OTHER INFORMATION.
Securities Trading Plans of Directors and Officers
A significant portion of the compensation of our officers is delivered in the form of equity awards, including performance share awards, restricted stock units and stock options. The Company’s compensation programs and practices are designed to pay for performance and to align management’s interests with those of the Company’s stockholders while attracting, motivating and retaining superior talent to lead our Company. In addition, members of the Board of Directors receive a portion of their compensation in Company common stock. Our executive officers and directors may engage from time to time in the open-market sale or other transactions involving those securities, and may also purchase our securities.
Transactions in our securities by our directors and officers are required to be made in accordance with our Insider Trading Policy, which, among other things, requires that the transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our directors and officers are permitted to enter into trading plans designed to comply with Rule 10b5-1.
During the third quarter of 2026, none of our directors or officers
38
Item 6. EXHIBITS
3.1 |
Amended and Restated Certificate of Incorporation of Fortune Brands Innovations, Inc., effective May 6, 2026, is incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2026. |
|
|
3.2 |
Amended and Restated Bylaws of Fortune Brands Innovations, Inc., effective May 6, 2026, are incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2026. |
|
|
31.1* |
Certificate of Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
31.2* |
Certificate of Chief Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
32.* |
Joint Chief Executive Officer/Chief Financial Officer Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
101.* |
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 26, 2026 formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Cover Page, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Equity, and (vi) the Notes to the Condensed Consolidated Financial Statements. |
|
|
104.* |
Cover Page Interactive Data File (embedded within the iXBRL document). |
* Filed or furnished herewith.
39
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
FORTUNE BRANDS INNOVATIONS, INC. |
|
(Registrant) |
|
|
Date: November 4, 2026 |
/s/ Peter G. Clifford |
|
Peter G. Clifford |
|
Executive Vice President and Chief Financial Officer |
|
(Duly authorized officer and principal financial officer of the Registrant) |
40