Fortune Brands Report Strong Sales in Q1 2020

by Emily Blackburn

Fortune Brands Home & Security, Inc.,  a home and security products company, today announced first quarter 2020 results.

Fortune Brands - Wikipedia

For the first quarter of 2020, sales were $1.4 billion, an increase of 6 percent over the first quarter of 2019. Earnings per share were $0.77, compared to $0.60 in the prior-year quarter. EPS before charges / gains were $0.81, compared to $0.63 the same quarter last year. Operating income was $155.0 million, compared to $135.6 million in the prior-year quarter. Operating income before charges / gains was $169.8 million, compared to $142.0 million the same quarter last year, up 20 percent.

For each segment in the first quarter of 2020, compared to the prior-year quarter:

  • Cabinet sales increased 8 percent. Accelerated growth in value-priced cabinets more than offset flatter performance in higher-priced products. Operating margin before charges / gains was 9.0 percent, an increase of 120 basis points over the first quarter of 2019.
  • Plumbing sales increased 2 percent, 9 percent excluding the impacts of COVID-19 and foreign exchange. The Company’s Chinese plumbing business was closed for approximately six weeks during the quarter. Plumbing delivered strong results across all U.S. channels with operating margin before charges / gains at 22.3 percent
  • Doors & Security sales increased 6 percent, driven by double-digit sales growth of doors and composite decking. Operating margin before charges / gains was 10.4 percent, which was up 160 basis points versus the first quarter of 2019.

Balance Sheet and Liquidity

At the end of the quarter net debt was $2.1 billion and net debt to EBITDA was 2.2x. The Company had $360 million in cash and $1.0 billion of availability under its revolving credit agreement.

On April 29, 2020, the Company, in cooperation with its lending group, executed a new supplemental 364-day revolving credit facility. This new facility increases borrowing capacity by $400 million and operates essentially under the same terms and conditions as the existing facility.

2020 Outlook and COVID-19 Update

The Company started the year with a strong first quarter, reflective of the share gain momentum and operating excellence in each of the businesses. Due to COVID-19, the Company expects a deceleration in its markets in the second and third quarter. The Company has established plans in each of its businesses to reduce expenses and cash deployment significantly.

The Company has continued to operate in most of its manufacturing and distribution locations. The Company has taken significant steps in excess of WHO and CDC guidelines to safely navigate the COVID-19 environment in each facility. The Company’s residential and commercial building and safety products have been generally deemed essential in North America.

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