On January 30, 2024, Fortune Brands Innovations Inc (FBIN, Financial) released its 8-K filing, detailing its financial performance for the fourth quarter and full year of 2023. The company, a leader in home and security products, reported a mixed set of results, reflecting the challenges of a tough macroeconomic environment.
FBIN's Q4 2023 sales saw a 3% increase to $1.2 billion compared to the same period in 2022. However, when adjusting for the non-recurring 53rd week and foreign exchange (FX) impacts, organic sales actually decreased by 3% to $1.1 billion. The company's earnings per share (EPS) for the quarter stood at $0.64, marking a significant 35% decrease from the previous year. The non-GAAP EPS before charges/gains was $0.95, an 11% decrease, influenced by one-time separation items and the 53rd week.
For the full year of 2023, FBIN's sales were $4.6 billion, a 2% decrease from 2022. Organic sales, excluding the 53rd week and FX, were down by 6% to $4.4 billion. The full-year EPS was $3.17, a 23% decrease from the previous year, while the non-GAAP EPS before charges/gains was $3.91, an 8% decrease.
Financial Highlights and Challenges
FBIN's performance in 2023 was marked by several challenges, including lower sales volumes and the impact of the non-reoccurring 53rd week. The Water Innovations segment, led by the Moen brand, and the Security segment, which includes Yale and August residential smart locks, were both affected by these factors. The company's operating margins were also impacted by inventory actions in the first half of the year, particularly in the Water Innovations and Outdoors segments.
Despite these challenges, FBIN remains confident in its ability to perform in 2024. CEO Nicholas Fink emphasized the company's focus on generating sales above the market, preserving margins, and generating cash. The company's commitment to driving long-term shareholder value is further underscored by the announcement of a new $650 million share repurchase authorization.
Balance Sheet and Cash Flow
FBIN concluded the year with a strong balance sheet, boasting $1.1 billion in operating cash flow and $799 million in free cash flow. The company actively repurchased $150 million of shares throughout the year and maintains full availability on its revolving credit facility. The company's net debt stood at $2.3 billion, with a net debt to EBITDA before charges/gains ratio of 2.5x.
Looking Ahead: 2024 Guidance
For 2024, FBIN is setting its sights on outperforming the market. CFO David Barry provided guidance that includes a net sales increase of 3.5% to 5.5%, with organic net sales ranging from a decrease of 1% to an increase of 1%. The company aims for an operating margin before charges/gains of 16.5% to 17.5% and an EPS before charges/gains of $4.20 to $4.40. The guidance reflects FBIN's strategic focus on growing core businesses, accelerating connected products, and pursuing margin growth.
Fortune Brands Innovations Inc's performance in 2023 and its outlook for 2024 will be of significant interest to value investors, particularly those focused on the construction industry and related sectors. The company's strategic initiatives and financial discipline in the face of market headwinds demonstrate a commitment to maintaining its position as a leading innovator in the home and security products space.
For more detailed information on FBIN's financial results and future outlook, investors are encouraged to review the full earnings report and join the investor conference call.
Explore the complete 8-K earnings release (here) from Fortune Brands Innovations Inc for further details.
