Fortune Brands Innovations Q1 Earnings Call Highlights

Fortune Brands Innovations NYSE: FBIN reported lower first-quarter earnings and reduced its full-year 2026 outlook, citing a softer U.S. housing market, higher commodity and freight costs, and the need to address execution issues across the business.

On the company’s earnings call, Interim Chief Executive Officer Dave Barry said Fortune Brands has “strong brands and a solid strategic foundation,” but acknowledged that “recent execution and current level of profitability is not where it needs to be.” Barry said management is focused on improving operational discipline, reducing costs and directing resources toward higher-return opportunities.

Leadership changes and CEO search remain in focus

Chair of the Board Susan Kilsby opened the call by addressing recent leadership and governance changes. She said the board has engaged extensively with shareholders regarding the CEO succession process and has reopened the search for a permanent chief executive.

Kilsby said the board is seeking a leader with the ability to “instill focus and drive execution,” especially across global supply chains and complex routes to market. She said the ideal candidate would also have building products industry knowledge and a track record of delivering sustainable sales and margin growth.

Barry, who previously served as the company’s chief financial officer and most recently as president of Security and Connected Products, is serving as interim CEO. Ashley George, who has nearly a decade of experience with Fortune Brands, is serving as interim CFO.

Kilsby also highlighted the March addition of Ed Garden to the board, citing his investment, financial and public company board experience. She said the company is conducting a director search as two longer-tenured directors are expected to retire before the 2027 annual meeting.

First-quarter sales decline as housing market remains soft

For the first quarter, Fortune Brands reported total company sales of $1 billion, down 2% from the prior year. Excluding the impact of China, sales declined 1%. Barry said lower volume was partially offset by price, and that the results reflected continued softness in the U.S. housing market.

Barry said the company made progress in retail and e-commerce channels, but that weak new construction activity weighed on the wholesale channel. Consolidated operating income was $112 million, down 18%, while operating margin declined 200 basis points to 11.1%. Earnings per share were $0.53, down 20%, primarily due to lower operating income.

The company said the operating income decline was driven by lower sales volume, higher raw material and freight costs, and the flow-through of peak tariff rates from the third quarter of 2025.

Segment results show mixed channel performance

Interim CFO Ashley George said Water segment sales were flat at $564 million. Excluding China, Water sales rose 2%, driven by growth in Moen and House of Rohl, with pricing offsetting lower volume. Moen returned to sales growth in retail and e-commerce, but wholesale declined due to weaker new construction-related demand. Water operating income fell 6% to $106 million, and operating margin declined 120 basis points to 18.8%.

Outdoors sales were $294 million, down 3%, driven largely by Fiberon and partially offset by strong demand in Therma-Tru. George said channel inventories remained historically low and were a modest headwind as customer seasonal builds came in below the prior year, particularly at Larson. Outdoors operating income fell 31% to $22 million, with operating margin down 300 basis points to 7.4%.

Security sales were $153 million, down 6%, as volume declines were partially offset by price. George said commercial channel sales grew, but were offset by weaker retail and e-commerce demand. Security operating income declined 7% to $22 million, while operating margin was flat at 14.2%.

Barry said the company sees “significant untapped potential” in Master Lock and pointed to new product launches including the Master Lock Elite padlock and Yale Pro 2 product line. He also highlighted Moen’s new “Must Be a Moen” brand campaign and a new Therma-Tru entry door product that exceeded the company’s first-quarter sales plan.

Cost savings target doubled to $70 million annual run rate

Barry said Fortune Brands is increasing its annualized cost savings target to $70 million, up from the $35 million discussed in the prior quarter. The company expects to capture $15 million of those savings in 2026, with the full annualized amount realized by the first quarter of 2027.

Barry said the savings will come from opportunities across the profit and loss statement, including SG&A, manufacturing, trade spending and fixed-cost alignment. He said the company is not “cutting muscle” and intends to preserve investments needed to improve performance.

The company is also working to improve its sales, inventory and operations planning process. Barry said inconsistent planning contributed to inventory imbalances and service challenges in parts of the business. He described the issue as a process gap rather than a need for additional headcount.

Full-year outlook reduced on market uncertainty and inflation

Fortune Brands now expects full-year 2026 net sales to be down low single digits and adjusted EPS of $3.00 to $3.30. The updated outlook assumes operating margin of 13.5% to 14.5%.

George said the company reduced its sales outlook by roughly 2.5 to 3 percentage points at the midpoint, bringing expected performance in line with the market. She said the revised outlook reflects volume, not a change in pricing plans.

The company now expects combined tariff, commodity and freight headwinds of about $180 million, up from its prior expectation of about $140 million. Barry clarified during the question-and-answer session that the tariff component remains about $100 million in both outlooks, with the increase driven by commodities and freight.

George said full-year price is expected to be up mid-single digits and that Fortune Brands expects to offset inflation with price on a dollar basis, though with some short-term margin dilution. Barry said the company has relied heavily on gross price in the past and now intends to use a broader set of levers, including sourcing, productivity, cost reduction and more targeted pricing in areas with less elastic demand.

Management said second-half margins are expected to improve by about 300 basis points compared with the first half, primarily due to a more favorable price-cost relationship and the impact of 2026 cost savings. Barry emphasized that the guidance does not assume a second-half recovery in the market.

“We are taking decisive actions to strengthen our execution, optimize our structure, and focus our resources on our highest returning opportunities,” Barry said in closing. “We believe these steps, combined with the strength of our brands and our people, will position us to drive improved performance over time.”

About Fortune Brands Innovations NYSE: FBIN

Fortune Brands Innovations NYSE: FBIN, formerly known as Fortune Brands Home & Security, is a global leader in water innovations, specializing in the design, manufacturing and marketing of plumbing fixtures, fittings and related products. Headquartered in Deerfield, Illinois, the company leverages two iconic brands—Moen and House of Rohl—to deliver high-quality kitchen and bathroom solutions across residential and commercial markets. With a focus on performance, reliability and aesthetic design, FBIN’s portfolio spans faucets, showerheads, accessories and water filtration systems.

The company’s products are sold through a diversified network of retail partners, wholesale distributors and online channels across North America, Europe, Asia-Pacific and Latin America.

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