Fortune Brands Innovations, Inc.

What they do

Fortune Brands designs, manufactures and sells branded products in four categories: plumbing and accessories (including digital water products), entry door and storm door systems, security and safety products, and outdoor performance materials for decking and railing. The company operates through three reportable segments: Water Innovations, Outdoors, and Security. In fiscal 2025, 84% of net sales were to the United States, with Canada at 8% and China at 3%.

Revenue drivers

• Water Innovations — Largest segment; Q2 2026 net sales of $605.0 million, down 6.5% year-over-year; operating margin before charges/gains of 29.5%.
• Outdoors — Includes decking and railing products; Q2 2026 net sales of $364.5 million, down 3.8%; operating margin before charges/gains of 15.2%.
• Security — Security and safety products; Q2 2026 net sales of $184.4 million, up 3.8%; operating margin before charges/gains of 26.8%.

Recent performance

In Q2 2026, net sales were $1.15 billion, a 4.1% decrease versus Q2 2025. GAAP EPS was ($0.19), including a ($1.44) asset impairment charge and a $0.52 benefit from net tariff refunds; EPS before charges/gains was $1.35. Full-year 2025 revenue was $4.46 billion, down from $4.61 billion in 2024, with net income of $298.8 million versus $471.9 million. Operating cash flow for 2025 was $478.6 million.

Strategy

Management is focused on improving execution, bringing discipline to the cost base, refocusing resources on core businesses, and generating sustainable growth. The company is investing to enhance service levels and accelerate new product development. Recently, it announced plans to consolidate U.S. regional offices into a single campus in Deerfield, Illinois, supported by Illinois EDGE tax credits. The company continues to prioritize organic growth initiatives, strategic acquisitions, and returning cash to shareholders via dividends and share repurchases.

Risks

• Housing market cyclicality — Demand depends on North American and Chinese home improvement, repair/remodel and new construction activity; rising mortgage rates and inflation have slowed sales.
• Tariffs and trade policy — Changes in U.S. tariffs on China, Canada, Mexico and other countries, and reciprocal actions, could increase costs or disrupt supply chains.
• Key customer concentration — Reliance on wholesale distributors, dealers and retailers creates exposure to customer decisions and financial health.
• Execution and leadership transition — Recent leadership changes and organizational restructuring risk near-term disruption and may not achieve intended cost savings or growth benefits.

Outlook

For full-year 2026, management updated guidance to reflect net tariff refunds and investments to enhance execution, now expecting EPS before charges/gains of $3.22 to $3.52, a $0.52 benefit from net tariff refunds, and net sales down low single digits. The company believes the long-term outlook is favorable but remains cautious on the housing market and broader economy.