Fortune Brands Innovations NYSE: FBIN reported second-quarter sales of $1.2 billion, down 4% from a year earlier, as service-level challenges in its Water segment and softer new-construction demand weighed on results. The company said operating income rose 18.4% to $236 million and earnings per share were $1.35, with both measures benefiting from anticipated tariff refunds.
New Chief Executive Officer Jesse Singh, who joined the company about a month ago, said Fortune Brands is pursuing a simpler, more customer-focused operating model while increasing investments to improve service, accelerate product development and support long-term growth.
“Our customers should be the center of everything we do,” Singh said. “Our intent is to get back to basics, better service, better products, and a simpler, more customer-focused organization.”
Tariff Refunds Lift Reported Results
Interim Chief Financial Officer Ashley George said the company recognized $122 million in gross tariff refunds during the quarter. Of that amount, $104 million was recorded as a reduction in cost of goods sold, producing an $81 million benefit to operating income, a 700-basis-point benefit to operating margin and a $0.52 benefit to quarterly EPS after directly attributable variable compensation expense.
The remaining $18 million was recognized as an inventory reduction and is expected to flow through the income statement during the second half of 2026. Fortune Brands expects that benefit to be fully offset by remaining related variable compensation expense. The company had collected approximately $56 million in gross refund proceeds through July 31 and expects to receive most of the remaining proceeds before year-end.
Excluding the net tariff-refund benefit, George said second-quarter results were in line with company expectations.
Water Segment Faces Service and Supply Chain Pressures
Water segment sales fell 6.5% to $605 million, or 5.4% excluding China. The company attributed the decline to service-level issues, the carryover effect of share losses in the first half of 2025 and softer new-construction-related demand in wholesale channels. E-commerce growth partly offset those pressures.
Water operating income increased 7.9% to $179 million, while operating margin expanded 390 basis points to 29.5%. However, results included a $66 million net tariff-refund benefit. Excluding that benefit, the underlying margin declined due to unfavorable price-cost dynamics, lower-volume leverage and higher costs to serve customers.
Singh said recent supply-chain, organizational and systems changes had disrupted the company’s sales and operations planning process. The company is returning to prior processes that had delivered more consistent service levels and is spending more on premium freight, distribution centers and sourcing to improve fulfillment.
Chief Operating Officer Dave Barry said Water margins could remain under pressure over the next several quarters, though price-cost trends are expected to improve sequentially in the third quarter and become more favorable year over year in the fourth quarter.
Outdoors and Security Show Relative Strength
Outdoors sales declined 3.8% to $365 million. Excluding Fiberon, sales were down 1.5%, reflecting weaker wholesale new-construction demand, partly offset by retail growth and favorable pricing. Larson performed well as its retail reset continued to gain traction, according to the company.
Outdoors operating income rose 14.2% to $56 million, with operating margin up 240 basis points to 15.2%. The segment received a $5 million benefit from anticipated net tariff refunds, while improved operating performance was partially offset by lower volume and higher tariff, commodity and freight costs.
Security sales rose 3.8% to $184 million, supported by growth across commercial, retail and e-commerce channels. New product launches and a Master Lock packaging refresh contributed nearly 200 basis points to segment sales growth, George said. Security operating income climbed 88.2% to $50 million, including a $19 million net tariff-refund benefit.
Barry highlighted the recently launched Moen SwivelControl faucet and Master Lock Elite padlock as examples of the company’s renewed product-development effort. He said initial consumer and channel-partner response to the faucet was positive, while the Elite padlock was exceeding sales expectations.
Cost Actions, Portfolio Review and Updated Outlook
Fortune Brands is moving brand, marketing and advertising teams back into its business units after previously centralizing those functions. Barry said the move is intended to bring commercial decisions closer to customers, reduce organizational layers and speed decision-making.
The company remains on track to deliver approximately $70 million in annualized run-rate savings by the first quarter of 2027, including $15 million expected in 2026. It is also conducting a strategic review of Fiberon and evaluating other parts of its portfolio, though management did not provide a timeline for completing the Fiberon process.
Singh said the company plans to complete a broader business realignment by the end of 2026 and expects progress from its initiatives during 2027. Management said it will prioritize organic investment over mergers and acquisitions while working to reduce net leverage below 2.5 times EBITDA. Net debt at quarter-end was approximately $2.3 billion, or 2.7 times EBITDA.
For 2026, Fortune Brands maintained its expectation for net sales to decline by low single digits, though it now expects results to be slightly below the midpoint of that range. The company forecast full-year EPS of $3.22 to $3.52, including the $0.52 benefit from anticipated net tariff refunds. Excluding that benefit, guidance implies EPS of $2.70 to $3.00.
The company expects third-quarter sales to decline 1% to 2%, with EPS of $0.72 to $0.76 and operating margin of 12.5% to 13%.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Before you consider Fortune Brands Innovations, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Fortune Brands Innovations wasn't on the list.
While Fortune Brands Innovations currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
