Fortune Brands Q4 2022 Earnings Report
Key Takeaways
Fortune Brands Innovations reported a 7% decrease in Q4 sales, with earnings per share at $0.99. The company is prioritizing market-beating sales results, margin preservation, and cash generation in 2023 against a declining market.
Q4 sales declined 7 percent.
Q4 EPS were $0.99; EPS before / charges gains were $1.07.
Operating margin was 16.1 percent, Operating margin before charges / gains was 17.3 percent.
The Company used a portion of the proceeds from the dividend from the Cabinets spin-off to pay down all outstanding variable rate debt.
Fortune Brands
Fortune Brands
Forward Guidance
The Company expects full-year 2023 sales to be down 5 percent to 7 percent with operating margins between 16 percent and 17 percent. The Company expects EPS before charges / gains to be in the range of $3.60 to $3.80. For 2023, the Company expects to generate free cash flow of approximately $475 million, with a cash conversion rate of around 100 percent.
Positive Outlook
- Successfully executed a spin-off of Cabinets business.
- Rebranded entire Company.
- Reorganized the Company from a decentralized structure.
- Placed global supply chain resources under a unified leadership team.
- Will enable to deliver on the long-term targets.
Challenges Ahead
- The Company’s assumption of a total global market decline of 6.5 percent to 8.5 percent.
- The U.S. housing market also declining 6.5 percent to 8.5 percent.
- Expects full-year 2023 sales to be down 5 percent to 7 percent.
- Implies decremental operating leverage of between 25 percent and 30 percent.
- Expects EPS before charges / gains to be in the range of $3.60 to $3.80.