Fortune Brands shares rise 3.3% after Q3 profit beat and forecast cut

Fortune Brands (FBIN) said on Nov. 3 that third-quarter EPS before charges and gains rose to $1.14 per share, above the 75 cents per share consensus estimate, and that it has cut its full-year EPS forecast.

Shares rose 3.3% to $47.41 in the regular session on Nov. 4 at 3:59 p.m. ET, from a regular-session close of $45.89.

The company makes home, security and digital products, including Moen, Master Lock and Yale residential.

Net sales fell 3.1% from a year earlier to $1.11 billion, missing the $1.15 billion consensus estimate.

Here's how the company did:

• EPS before charges and gains: $1.14 per share vs. 75 cents expected, and $1.09 a year earlier
• GAAP EPS: 42 cents per share vs. 59 cents a year earlier
• Net sales: $1.11 billion vs. $1.15 billion expected, and $1.15 billion a year earlier

EPS before charges and gains rose 4.6% from a year earlier.

GAAP results included a $73.8 million asset impairment charge, which cut GAAP EPS by 47 cents per share.

The quarter also included a $0.28 per share net tax benefit and $0.14 per share of net tariff refunds, the company said.

2026 guidance

The company now expects 2026 EPS before charges and gains of $3.20 to $3.30, down from the $3.22 to $3.52 range it gave on Aug. 4.

For the fourth quarter, it expects net sales of $925 million to $995 million and EPS before charges and gains of 19 cents to 29 cents per share.

For the full year, it expects net sales of $4.21 billion to $4.28 billion, operating cash flow of $480 million to $500 million and free cash flow of $380 million to $410 million.

Fortune Brands Chief Financial Officer Pete Clifford said: “While these actions will weigh on our near-term results, they position us to enter 2027 on stronger footing.”

Portfolio actions

The company has entered into a purchase agreement to sell Fiberon, and it is exiting its China commercial operations and rationalizing its EMEA operating footprint in its Water segment.

The company expects the China exit to be completed by the third quarter of 2027 and the EMEA rationalization by the fourth quarter of 2027.

Together these businesses generate an annualized operating loss of $50 million to $55 million on revenue of $320 million to $330 million.

Fortune Brands Chief Executive Officer Jesse Singh said: “Our biggest challenge has been our own execution, and we are taking aggressive steps to drive improvement.”

The company targets $70 million of annualized SG&A savings by the first quarter of 2027.

It has also added a new chief financial officer, chief information officer and chief legal officer.

Cash and balance sheet

The company generated $347.0 million in operating cash flow and $331.1 million in free cash flow in the quarter, and repurchased $40 million of its shares.

It ended the quarter with liquidity of about $1.3 billion and net debt to EBITDA before charges and gains of 2.5x.

Net income swung from a profit of $24.2 million in the first quarter of 2026 to a loss of $22.5 million in the second quarter, according to its SEC filings.