Nicholas Fink
Chief Executive Officer at Fortune Brands Home & Security
Thanks, Dave, and thank you to everyone for joining us on the call today. Our teams once again rose to the occasion to deliver an exceptional quarter, driving outperformance while facing tremendous supply chain headwinds, including challenges in labor, freight and material availability. Demand for our products remains very strong and we are working tirelessly to serve our customers, while combating the global supply chain challenges facing most industries. The perseverance shown by our team members across our world-class brands has been nothing short of remarkable. Our third quarter results demonstrate that we can deliver even in the face of significant challenges. We remain firmly on track for a record year with exceptional growth and margin improvement and to reach the long-term goals for Fortune Brands that were communicated earlier this year.
For the third quarter company sales increased 20% in total and 14% organically with all segments driving strong growth. This past quarter marked an all-time record in quarterly sales as we near $2 billion. Operating income increased 20% and earnings per share increased 25% incredible results, especially given the current external environment. Demand for our products in the quarter was and remains robust and we expect growth to persist as consumers continue to invest in housing. Our leading brands are well positioned to capitalize on these tailwinds and our teams continue to drive share gains across the portfolio. Our mid-teens organic sales growth was complemented by LARSON, which is exceeding our expectations in terms of both performance and synergies.
I'm proud of our team's ability to integrate this asset and drive performance, notwithstanding the challenging supply chain environment. Headwinds from supply chain particularly in labor availability and freight and materials inflation increased both during the quarter and relative to previous expectations. We are addressing these challenges by leveraging our Fortune Brands advantage capabilities and through incremental price. Across the company we are diligently working to be continued strong demand, while keeping our customers served and employees safe. As global supply chains labor and other inflationary pressures all remain dynamic we've updated our 2021 financial guidance, as was highlighted in our earnings press release earlier today. Pat will provide additional detail later in the call.
Importantly, we remain on track to achieve exceptional growth and margin improvement in 2021 as well as towards our long-term targets communicated earlier this year. Notwithstanding these external challenges, we continue to increase investment to drive the long-term growth and margin progression of the company. In the quarter, we furthered our strategic agenda and made more than $30 million of incremental investments behind our digital journey, brand, innovation and Fortune Brands Advantage capability, while also delivering an operating margin on par with prior year. These investments were made in addition to the incremental investments made throughout last year.
For the full year, we expect to make operating margin progress of around 50 basis points versus a year ago, while continuing to invest in our strategic priorities to drive long-term stakeholder value creation. Our strategies are delivering in this environment and those incremental investments should only accelerate our performance when the current pace of challenges moderates. The company continues to generate high levels of free cash flow and our balance sheet is strong. We are committed to efficient and effective capital deployment by investing in strategic capital projects, executing disciplined M&A transactions and returning dollars to shareholders via dividends and share repurchases. Our leverage remains very healthy and we have plenty of capacity to deploy additional capital for more value creation activities.
We recently chose to accelerate capacity investments in Moen and the House of Rohl, Therma-Tru and Fiberon brands and expect excellent returns from these initiatives. Additionally, we repurchased $114 million of shares in the third quarter and our year-to-date share repurchase total currently stands at over $380 million. As the company celebrated its 10-year anniversary of its spin off in public listing in early October, cumulative capital return to shareholders through repurchases alone surpassed $2.5 billion. Importantly throughout our 10 years, we've also worked to serve all of our stakeholders. From developing sustainable innovative products and processes to our best-in-class safety records, to our commitment to advance diversity, equity and inclusion ESG has long been a part of our culture.
This past quarter we've made some exciting advancements in our ESG journey and unveiled a new website with an enhanced focus on ESG. We continued to receive recognition for our best-in-class safety record, including multiple awards for the work we do keeping our employees safe. In honor of our 10-year anniversary we announced meaningful partnerships with two outstanding affordable housing organizations. I can't think of a better way to celebrate our milestone anniversary then make this commitment to help make the dreams of home more attainable for many families in our communities. While there is more work to be done, I'm proud of what our team has accomplished.
Over the past decade we've proven our ability to execute in any environment and to drive sustainable long-term shareholder value creation. This is possible because of the team of exceptional people across our organization who continue to make it different, putting safety first, going above and beyond to serve our channel partners and customers and operating with a commitment to excellence. They are the flag carriers of our culture, which drive our resiliency and results. Thank you to all who worked so hard each day, standing proudly behind our world-class brands that make an increasingly positive impact on people's homes, safety and communities.
Turning to the remainder of our remarks today. First, I will discuss what we're seeing in the home products market. I will then highlight key takeaways from our third quarter and provide additional color on what drove the result. Finally, Pat will provide highlights on our financial results, balance sheet strength and liquidity as well as thoughts around our updated guidance to our financial outlook for the full year.
Now, turning to our view on the housing market. Long-term fundamentals for housing and home products remained very favorable. The significant deficit of homes available for sale and the structural under-building that is contributing to the current housing situation has been elongated by increasing labor, supply chain and material availability headwinds. While these challenges have made global headlines and will take time to normalize it will take much longer, years in fact, to work through the significant under-supply up-to-date homes relative to demand.
We saw some moderation in the pace of home sales versus Q3 of 2020. We view this moderation is a net positive as it allows for more sustainable long-term expansion of housing products, while still driving very strong demand. Notwithstanding for moderation, demand for our products continued to persist ahead of supply. We will also experienced some rebalancing of demand across channels and between the rebalancing and the very strong but moderating home purchasing market we believe the overall marketplace is on an even healthier footing for long-term sustainable growth than it was this time last year.
Within both the new construction and repair and remodel markets we continue to see consumers focusing investment on the home. Demand for larger ticket and pro-oriented projects remains elevated which squarely aligns with much of our product portfolio. These product categories are sold mostly through the trade, wholesale and builder channels and we experienced strong sustained momentum since before the pandemic. With our excellent relationships and preferred positioning in those channels coupled with market leadership for our premium brands we expect this momentum to continue and demand for our products to remain robust.
We also saw consumers continue to spend up the price spectrum into premium offerings. We have seen this multi-quarter trend in both Plumbing and Cabinets and I'll also seeing this trend play out within our premium offerings in decking and doors. This sign of continued consumer confidence to invest in the home reflects both the health of the consumer and household balance sheets as well as consumers growing aspirations for what the home can become. Whether it be a new construction or repair and remodel markets, we believe we are optimally positioned to capture accelerated share leverage by the best home product portfolio in the U.S. and have leadership positions in all of our brands.
Driven by an advantage set of channel positions, significant growth capital to deploy and supported by our world-class people we could not be more excited about the future. With that market backdrop some thoughts on the recent quarter. We had a stellar quarter even in the face of incremental supply chain headwinds. Demand was robust through the quarter and remain strong today across the whole portfolio. Our teams are working tirelessly to offset the numerous supply chain and labor constraints and we're taking incremental actions to deliver both near-term results and long-term growth and margin objectives. Cumulatively, labor shortages and freight constraints were almost acute pressure points across the portfolio and they are more challenging than even 90 days ago.
We are responding with stronger measures in human capital attraction and retention strategies, at the same time we are also leveraging our Fortune Brands Advantaged capabilities to reduce complexity and minimize dependence on labor. We're also utilizing our scale and capabilities in global sourcing and logistics to optimize freight efficiency. We're further developing and deploying our Fortune Brands Advantage capabilities and are funding strategic investments in key growth priorities, including in our digital journey, brand building and product innovation as well as in capacity and distribution expansion. These investments are contributing to our resiliency and as conditions normalize we expect to continue to increase sales and margin allowing for stronger capital deployment and investment, which will drive our perpetual outperformance engine for the long-term.
Now, let me turn to our individual businesses and how we're positioning for long-term growth, starting with Plumbing. Our Global Plumbing Group once again significantly outperformed the global and U.S. markets this past quarter, taking share in every geographic region in which we operate. The business continues to fire on all cylinders with sales growth of 26% or 23% excluding FX. A strong Plumbing sales drove operating leverage, resulting in a 22.6% operating margin for the quarter, notwithstanding increased investment in brand, innovation and improved customer service.
Our North American wholesale and e-commerce channels delivered strong double-digit growth and we continue to grow in retail despite very elevated comps from the prior year. We are winning share in generating incremental investment dollars to pursue further above market growth and margin. In North America, our Plumbing business has never been stronger. We continue to be an industry leader in both innovation and key metrics and brand awareness, purchase intent and loyalty among customers.
Moen continues to lead in innovation and design and push new on trend styles and functionality, including the recently launched Nebia by Moen's by Quattro product line. This cutting-edge shower gives consumers the power to customize their experience, while incorporating the Nebia by Moen's proprietary water saving technology, delivering on our water saving initiatives and ESG strategy. As our business grows, we are also investing in incremental capacity across the supply chain, including a new distribution center opening this quarter.
In China, Moen achieved strong double-digit growth as our investments behind the Moen brand, category expansion and innovation continue to resonate the Chinese consumer. Given our broad product offering, diverse channel exposure and increasingly relevant consumer brand, we see continued growth in China despite headwinds from the slowing new construction market. As we've demonstrated in the past, our sales growth was driven by our innovation and category expansion efforts is not tied tightly to the overall market. Additionally, we built the resilient China business with a cost structure that can flex to preserve margin delivery. While we anticipate that there may be interim slowing of that marketplace, we are well equipped outperform as we did during the last slowdown in 2017.
Finally, the House of Rohl sales grew very strong double-digits in all regions, momentum in the luxury category has remained robust, and we expect demand to continue consumers' willingness to invest and spend into larger ticket R&R remain significant. To keep up with this demand, we recently approved an investment to modernize and add capacity to our House of Rohl manufacturing facilities.
Turning to Outdoors & Security, sales increased by 30% and operating margin was 15.6%. Organically, sales increased 6% and were impacted by the very elevated comps due to the shift in sales from Q2 to Q3 last year in doors and decking as our channels reopened following COVID shutdowns. Material and labor availability headwinds increased in the third quarter and continue to impact operations across all brands, including material shortages caused by Hurricane Ida. Our teams are hard at work to offset these challenges, which have restrained us from achieving targeted output.
Doors delivered mid single-digit sales growth in the quarter, reflecting constraints in labor and materials and very elevated comps due to the shift in sales from Q2 to Q3 last year as our channels reopened more fully after COVID shutdowns. Adjusting for the shift, sales increased mid-teens. Production interruptions are key component suppliers caused by Hurricane Ida affected supply in the quarter, but we work diligently across our supply chain to resolve these challenges going forward. Underlying demand remained strong across channels and we continue to work to service our customers at a high level.
Turning to decking, Fiberon sales grew mid single-digits off of a very strong quarter last year that also included the shift of sales from Q2 to Q3 due to channel reopening. Adjusting for 2020 shipment cadence, sales increased to around 20%. Our strategy of leveraging our deep customer relationships to partner with the leading distributors in each region continues to pay dividends as we remain in a sold-out position. We will be bringing incremental capacity online before year-end and we expect fourth quarter sales growth to eclipse 25%. We continued to leverage Fortune Brands Advantage capabilities and other internal synergies to increase output and streamline costs. Our ecofriendly composite decking continues to resonate with consumers and remains in high demand as we take additional share from traditional with decking.
As I mentioned earlier, integration of LARSON continues to progress well and the business is performing above expectations. Our teams across Outdoors & Security are working together to advance integration or capturing planned synergies. Finally, within security, we experienced continued success and momentum with high single-digit sales growth in the quarter as commercial, back to school and travel markets continued to rebound. Our key North American retail market for both Locks and Safes continues at levels stronger than prior to the start of the pandemic. The business is delivery on the Fortune Brands Advantages investments made over the last couple of years and is now generating incremental fuel for reinvestment.
Now, turning to Cabinets. Our Cabinets operations again delivered strong performance in the past quarter with sales growing over 9% and operating margin of 9.7%. In an extremely tough environment sales grew sequentially after the strong Q2 and margins performed at industry-leading levels. Demand was equally strong on both the stock and make to order with the strongest momentum continuing in our premium offerings. While labor challenges, material and freight inflation increased further all are manageable and we continue to take price and deploy continuous improvement initiatives to offset these headwinds.
Cabinets margin performance in such a challenging and fast evolving environment is a testament to how well our pivot plan and Fortune Brands Advantage capabilities are delivering. As the pace of challenges moderates and our pricing actions take further hold the business will accelerate its progress towards its long-term margin objective. Labor shortages and freight availability remain the biggest challenges impacting performance in margins in our Cabinets business. Our teams are deploying lean methodologies and complexity reduction strategies to ease the supply chain and labor limitations.
Significant order backlog exists across the business and will be worked through into 2022. We remain committed to our long-term margin goals for Cabinets and the business simplification progress that we made this year within our facilities will prove beneficial as we continue to solve our labor challenges and price realization catches up during the fourth quarter and into early 2022.
In summary, we continue to see very strong demand for our products and believe the housing cycle has being further elongated by current short-term acute headwinds. We're very focused on overcoming challenges and delivering in the short-term and we have built this company and its strong culture to win for the long term. Our commitment to excellence, each other and our brands leveraged by innovation, investment, and most importantly, purpose drives everything that we do. Our products positively impact to people's lives every day and we do not take that for granted. We are committed to growing stronger together and we'll do so in a sustainable way.
As we near the end of 2021 and look to 2022 and beyond the actions that we are taking now and the investments that we're making and expect to make in the future should drive above market growth and a stronger margin profile. We have a strong balance sheet and the ability to deploy a significant amount of capital over the next few years. We're excited about the housing market and for the future of our company. We will remain steadfast in our mandate to create value regardless of the environment.
With that, I will turn the call over to Pat who will speak to our financial results and updated guidance. Pat?